1. At the NE Annual General Meeting (“AGM”) on 23 May 2025, members of NE were given an update on NE Portfolio 2030 (NEP 2030) and the key chronology and issues related to Allianz’s proposed offer for Income Insurance Limited (“Income”) in July 2024, which was subsequently withdrawn by Allianz in December 2024.
2. Members noted that NE would do some fundamental thinking on how to future-proof Income, honouring the considerations of different stakeholders, including the considerations laid out by the Minister, Ministry of Culture, Community and Youth (“MCCY”) in his Ministerial Statement on 14 October 2024. Members also noted that NE would reflect on the lessons learnt and improvements needed, so that NE could do better in future.
3. Since the NE AGM on 23 May 2025, Income held its AGM on 26 June 2025. Shareholders of Income were given an update pertaining to Income’s corporatisation and Allianz’s proposed offer for Income. The Income AGM speeches were made available to the public on the Income website on the same day. Please refer to Annex A for Income Chairman’s speech.
4. At today’s NE EGM, I would like to provide an update to NE members on Income and also NEP 2030 implementation.
Income Insurance Limited (Income)Lee & Lee Review
5. Earlier this year, NE Board had been requested by the National Trades Union Congress (“NTUC”), NE’s member with the most number of shares, to commission a review of NE’s governance during the corporatisation of Income and the Allianz’s proposed offer for Income.
6. NE Board set up a Board Review Committee to oversee the review. The law firm Lee & Lee was engaged to assist with the review of the actions taken by NE in relation to Income’s corporatisation in 2022 and the Allianz’s proposed offer for Income.
7. Lee & Lee conducted its review independently, and has since completed the review, setting out its findings in a report. As Chairman of NE, I met and shared the outcome of the review with the NTUC Central Committee. A copy of the report was given to the President and Secretary-General of NTUC.
8. Lee & Lee has found nothing to suggest that NE’s actions in relation to the corporatisation of Income and Allianz’s proposed offer for Income were contrary to the provisions of the applicable laws and regulations considered, including the Co-operative Societies Act and Rules.
9. I would like to reassure members that NE has always acted in good faith. This was earlier acknowledged in the 14 October 2024 MCCY Ministerial Statement. NE had acted in accordance with applicable laws and regulations, and Lee & Lee’s review reinforces this.
NE’s Reflections10. In addition to the Lee & Lee Review, NE has also done its own internal reflections.
11. In retrospect, NE could have done better in engaging key stakeholders. Engagement with key stakeholders had been done both formally and informally out of the public eye. NE acknowledges the importance of engaging stakeholders early, to raise general awareness about the evolving landscape of the insurance industry, and hence the necessity for strategic partnerships for Income’s long-term sustainability and growth.
12. Further, NE could also have done better by being more proactive in public communications, and aligning key messages with both NTUC and Income. NE has kept a low public profile since it was set up. Public communications tend to have been reactive.
13. There are 2 issues in particular that I would like to touch on that, with the benefit of hindsight, NE could have explained better so that these issues could have been fully understood by all stakeholders and the public.
Capital Resilience14. First, on the issue of Allianz’s preliminary business plan, which included a proposed capital optimisation plan.
15. In MAS’ press statement issued on 23 June 2025, it stated that “In mid-July 2024, MAS had received Allianz’s preliminary business plan for Income. This included a set of business and financial projections, which included a plan for capital efficiency and reduction. There was no application to MAS to approve the capital reduction plan, neither did MAS give any such approval. Any capital reduction would need separate and specific MAS approval.”
16. In NE’s view, capital resilience and capital efficiency are not mutually exclusive. There is no contradiction between capital resilience and capital efficiency. Being capital efficient may involve return of capital when there is excess capital and it is commonly undertaken by financially sound companies to optimise their capital structure.
17. With Allianz as a strategic partner, Income could operate on a leaner and more efficient capital base during ordinary times, and yet remain capital resilient in times of crisis, such as during financial recessions or pandemics. This is because with Allianz’s involvement, Income would have had the backing of 2 major shareholders at all times, including times of crisis. Income could have been more stable even with a reduced capital base, since it would not have to rely solely on NE should financial backing be required.
18. Allianz is the world’s leading insurance company, with strong expertise in insurance and asset management, deep financial capacity, and ready access to global capital markets. Therefore, Allianz as a strategic partner, would have strengthened Income’s market competitiveness and financial resilience over the long term, aligning with NE’s goal for long-term competitiveness and stability for Income.
Social Mission19. Second, what about Income’s social mission?
20. In my mind, Income’s social mission has always been clear. Since the founding of Income, its social objective has been the pooling of risks. There were few insurers more than fifty years ago and they were not keen to serve the working class.
21. Income was set up to fulfil a genuine social need at that time. This was enunciated by Dr Goh Keng Swee at the Modernisation Seminar of 1969. Dr Goh said: “…In my opinion, there is a genuine need for members of the working class to take out life insurance policies. If the need is not fulfilled, it is because private enterprise cannot reach these strata of society or the workers themselves do not understand the value and benefits of taking out such policies. Because social security in Singapore is in an extremely rudimentary form, the death of a wage earner almost invariably results in a harsh and cruel fate for the widow and surviving children. They often are reduced to immediate and appalling destitution. Life insurance taken out by workers would alleviate such hardships.” Please refer to Annex B for Dr Goh’s full speech.
22. The way that Income carries out its social mission must evolve with its operating environment, so that it can continue to meet the changing needs of its policyholders and customers.
23. 55 years after Income’s founding, Singapore’s social security is well-developed now, underpinned by the key national social insurance programmes operated by CPF. Further, the commercial insurers also target the mass segment.
24. Then Senior Minister and Minister-in-charge of MAS, Tharman Shanmugaratnam, had said this in his response to a Parliamentary Question in February 2022, with respect to the corporatisation of Income:
“1) When NTUC Income Insurance Co-operative Limited (NTUC Income) was established in 1970, there were very few direct insurers. It filled a major gap: to provide affordable insurance to workers in Singapore.
2) The Singapore insurance market has since grown significantly, with more than 40 direct insurers today offering a wide range of retail insurance products. The insurance market today is also highly competitive. No single insurer dominates in terms of providing the most affordable or innovative insurance products. NTUC Income becoming a corporate entity should therefore not have an impact on the affordability of insurance products. NTUC Income has, on its own part, also said that it will remain committed to improving the financial well-being of Singaporeans via affordable and quality insurance solutions.
3) The best way to have affordable prices and wide choice of products is to ensure a vibrant and competitive industry. MAS will continue to promote this.”
25. NE had long recognised the evolving landscape of the insurance industry in Singapore, as part of its regular portfolio review of its businesses to better future-proof them.
26. It is with some regret that what I have invested much time and thought in securing Income’s future through a strategic partnership has not come to fruition. While this particular chapter in Income’s history – of Allianz’s proposed offer for Income, which was subsequently withdrawn in 2024 – is closed, there is still much work to be done going forward for the NE Board to consider all strategic options that can future-proof Income and protect the interest of its policyholders over the long term, taking into account considerations of stakeholders.
Taking Income Forward27. NE’s strategic intent in seeking a strategic partner for Income was to strengthen Income’s market competitiveness and financial resilience over the long term. This would have enabled Income to better protect the interest of its policyholders over the long term, and continue to have a social impact in the highly competitive insurance industry.
28. NE and Income Boards have discussed Income’s medium term strategic direction and agreed that Income will strive to maintain its market leadership position in general insurance, and to improve its market position in life and health insurance.
29. NE and Income Boards have also discussed Income’s social impact, in light of evolving operating environment and also MCCY's considerations. Some inputs from NE to Income included
(i) to consider how Income could better enable lower income and more vulnerable customer segments to access its term life policies and basic health insurance policies
(ii) to consider setting up a Foundation, encompassing Income’s prevailing commitment of $100m for worthy causes announced at corporatisation
(iii) to consider making Income’s social impact commitments more relevant, tangible and also communicated more effectively.
30. In my view, refreshing Income’s Social Charter has to be done before NE can reach an understanding with MCCY on how NE could better secure Income’s long term capital resilience.
Role of NTUC Enterprise31. Now allow me to more broadly set out the context of what NTUC Enterprise does.
National Purpose32. Our National Purpose is the people’s Happiness.
33. Mr Lee Kuan Yew said in the Malaysian Parliament on 27 May 1965: “My business is the people’s happiness.” This short sentence was a very clear statement of Purpose.
34. The people’s happiness is enshrined in the Promulgation of Independence on 9 August 1965. When we recite our National Pledge, we remind ourselves of our duty to build a harmonious society to “achieve happiness, prosperity and progress” for our people.
35. The Purpose of NTUC – and the labour movement – flows from our National Purpose. NTUC’s mission is to “…help workers earn a better living and live a better life.”
NE’s Dual Roles36. NE’s purpose is Enabling Better Living, in support of NTUC’s purpose and social mission. As per the NEP 2030 strategic plan shared at NE AGM in May 2025, NE lives its purpose by playing two roles.
NE contributes to NTUC’s long term financial resilience37. Firstly, NE contributes to NTUC’s long term financial resilience. NE generates returns to fund NTUC and unions’ work to strengthen Workers’ Compact, and enhance the Wages, Welfare and Work Prospects of union members and the workforce. NTUC and its affiliated unions own the majority of the shares in NE. The NE portfolio generates surpluses, from which NE members receive dividends to fund their work.
NE contributes to NTUC’s social impact38. Secondly, NE contributes to NTUC’s social impact. NE makes life better for workers and their families, through the Impact Businesses and also Charities. NE portfolio augments NTUC’s reach and relevance to customers of the impact businesses, beyond the workplace. NE Charities also augment NTUC’s outreach to the vulnerable.
Impact Businesses39. NE does this through delivering essential goods and services via its five Impact Businesses – FairPrice Group, Income Insurance, NTUC Health, NTUC LearningHub and NTUC First Campus. NE is steering all of its impact businesses to review their respective Social Charters. Social Charters are living documents, and need to be reviewed periodically, to see whether they suit the prevailing operating environment. I have asked all the impact businesses to review their Social Charters, and derive Key Performance Indicators (KPIs) to measure progress, to be incorporated into their 2030 strategic plans. In their review, they have been directed to start with their Purpose, which must be aligned with NTUC’s and NE’s. The work has started. NE, as a cooperative regulated by MCCY, will seek MCCY's inputs as it reviews the key impact KPIs at a whole of portfolio level, at the right milestone of the progress.
40. The Impact Businesses must be financially sustainable over the long term. Therefore, they must earn their risk-adjusted cost of capital. Cost of capital is a measure of the risks of doing business. When an enterprise earns its cost of capital, it preserves its value. If it fails to earn its cost of capital, it destroys value, and will not last. An enterprise that earns more than its cost of capital strengthens its ability to grow. So, if our impact businesses can earn or exceed the cost of capital they can continue to achieve their social outcomes.
41. In short, all the Impact Businesses must be anchored on respective Purpose and Social Charters and capture a meaningful share of customer wallets and loyalty, so that they can have influence in the community. They must also earn at least the cost of capital to sustain growth and resilience over the long term. Staying true to purpose and focused on the customer is mutually reinforcing with industry leading performance. Being commercially competitive, financially disciplined and resilient and socially responsible are mutually reinforcing.
Charities42. Further, NE also improves the lives of workers through its charities to uplift the vulnerable. Comprising FairPrice Foundation, Bright Horizons Fund, Health for Life Fund, and Income’s OrangeAid programme, the NEP 2030 charities arm will augment what our impact businesses do to help workers and their families live better. It will work closely with NTUC to amplify the Whole of Integrated NTUC impact in caring for workers and their families.
Execution of 2030 strategic plans at NE and business levels43. Over the past 2 years, under NEP 2030 strategic planning, NE Board has worked closely with the boards of its businesses to chart the strategic plans towards 2030, aligning the entity-level business plans to NE’s dual roles.
44. As shared at the NE AGM in May 2025, NE Board holds the boards of the businesses accountable and NE members hold the NE Board accountable for the successful implementation of the 2030 strategic plans. I am pleased to share that the NE Board and Management are in full steam implementation of NEP 2030.
NE Chairman Succession45. The success of an enterprise – and indeed, of a country too – depends on the quality of the leadership. Mr Rajaratnam paraphrased Napoleon in a speech at Mr Lee Kuan Yew’s 50th birthday:
46. “An army of sheep led by a lion will do better than an army of lions led by a sheep!”
47. NE has to ensure that its board and management are filled by able people with courage. It must also see to it that the boards and management across the NE portfolio are likewise filled by able people with courage.
48. NE strives to operate with good corporate governance practices. Typically, a director should not hold office for more than 3 terms. As Chairman, I have exceeded the preferred norm.
49. The impact of COVID-19 further complicated NE’s succession planning. I felt it was essential to stay on, particularly to put Income on a more resilient footing for the long term. As Chairman, I have dedicated significant time in seeking a viable solution. Unfortunately, Allianz’s proposed offer for Income was withdrawn and I take ultimate responsibility. This is my one and only regret – that we have not yet secured Income’s future. It will take time, with a lot of hard work.
50. I recognise that there are limits to how long we can perform at our best. Next month I will be 78, 3 years past the age at which I had wished to retire.
51. A few months ago, there was a day when I had to look after my 2 young grandchildren - alone. It proved to be quite a challenge looking after them with both demanding my attention! But in a quiet moment, my elder grandchild, a granddaughter then 5 years old, asked me: “In your work, why do you have to travel so much?” I replied, “When you accept a job, some jobs require you to travel to meet and discuss with people.” She asked, “Why do you have to work so long hours?” I paused to understand her line of questioning. I asked her, “Do you mean I should stop working?” She replied with an emphatic “Yes.” There is wisdom in the words of a child.
52. I have decided to step down from NE, for a new Chairman to lead the Board and Management forward, including putting Income on a more resilient footing over the long term. I joined NTUC on 1 February 1981. It has been a long period of service to the NTUC. Up to today, it is just shy of 3 months to 45 years. I was nominated by NTUC to serve on the NE Board. With my retirement, NTUC has nominated Mr Tan Hee Teck.
53. I thank the Board of Directors of NE and the management of NE (past and present), for their commitment, diligence and hard work, underpinned by their strong personal values. I am also grateful for the support of the Chairmen and Boards across the portfolio. I thank all members, especially NTUC and unions, for your strong support since the set up of NE in 2012. I wish all a brighter future in the years ahead, in upholding NTUC’s purpose and social mission, in service of Singapore’s national purpose.
Annex A – Opening address by Mr Ronald Ong, Chairman, Income Insurance Limited at its Annual General Meeting on June 24, 2025
Introduction
Good evening and welcome to the Annual General Meeting of Income Insurance Limited.
I will now call the meeting to order. I have been informed that there is a quorum for this Meeting.
Before we embark on the formal proceedings of this Meeting, there are three matters that I would like to address.
The first matter pertains to questions around corporatisation, the second addresses clarifications around Allianz’s proposed offer for Income Insurance, and the third relates to my decision not to stand for re-election at today’s AGM.
Following which, I will pass the time to Income Insurance’s Chief Executive Andrew Yeo to share about the company’s key performance and business updates. Ury Gan, Income Insurance’s CFO, will then elaborate on the company’s 2024 financial performance. Following that, we will begin the formal proceedings of the AGM.
Corporatisation
Let me begin by emphasising that Income Insurance’s Board and management have always acted in good faith on all matters related to the company, guided by the long-term interests of Income Insurance and our stakeholders.
Over the last 55 years, Income Insurance’s operating environment has undergone significant shifts. These include a mature domestic insurance market, increasing regulatory expectations and requirements, as well as intensive competition from insurers with extensive distribution scale and access to growth channels and markets, both locally and regionally.
Today, there are more than 12 life and health insurers and over 40 competitors in general insurance in Singapore, largely served by foreign insurers. No single insurer dominates in providing the most affordable or innovative insurance products. As President Tharman, in his former capacity as Senior Minister and Minister in charge of MAS, said in parliament previously, the best way to have affordable prices and a wide choice of products is to ensure a vibrant and competitive industry.
Thus, we saw the corporatisation of Income Insurance as vital for levelling the playing field, by enabling the company to achieve operational flexibility and gain access to strategic growth options to compete on an equal footing with other insurers here and abroad.
More significantly, we must recognise that our success, thus far, would not have been possible without the numerous capital injections by NE over the years. NE’s capital injections were necessary as it was assessed that in turbulent times, Income Insurance’s solvency may come under pressure and hence, it was necessary to shore up Income Insurance’s capital adequacy. This is especially so as the insurance business is capital intensive.
However, Income Insurance’s co-operative structure would have posed challenges to its ability to raise equity capital.
This was because, under the then Co-operative Societies Act (“CSA”) and the by-laws of NTUC Income, institutional members must be co-operatives and trade unions, while ordinary members (being individual persons) must meet certain requirements under the CSA and the by-laws.
Furthermore, due to the redeemable feature of co-operative ordinary shares, such shares cannot be counted towards Income Insurance’s regulatory capital position and solvency. Simply put, the capital contributed by ordinary members then was treated as debt and not a source of equity capital.
When the CSA introduced a new class of permanent shares in 2018 for institutional members, only NE stepped forward to convert their shares to permanent status. No other institutional members did. This meant that only NE’s shareholding in Income Insurance was regarded as Tier-1 capital that counted towards the company’s regulatory capital and solvency position.
With improved financial strength via NE’s capital injections over the years, Income Insurance has been empowered to pursue diverse strategic business initiatives that had supported its growth and market competitiveness.
However, we are highly cognisant that regular capital injections from NE, as Income Insurance’s only source of Tier-1 capital under the co-operative structure, was not a sustainable solution to capitalise Income Insurance in the long-run.
The COVID-19 pandemic in 2020 was a case in point.
NE injected S$100 million and had another S$300 million on standby to safeguard Income Insurance’s solvency. In addition, we also issued S$800 million in subordinated bonds.
While Income Insurance’s capital adequacy remains strong under current conditions, the numerous regulatory capital changes and intensifying competition made it evident that Income needs to enhance its capital resilience to support its growth ambitions in the long-term.
As such, we saw the urgency for Income Insurance to break out of the co-operative status quo so that it could be better placed to potentially gain access to other capital sources if required.
At the time of corporatisation in 2022, I had said that it takes foresight to embark on the corporatisation exercise as it safeguards Income Insurance’s future-readiness as a business in an increasingly dynamic and complex operating landscape. It was a step in the right direction so that Income Insurance is empowered to continue building its business and to create long-term value for all our stakeholders, including our policyholders and shareholders.
This must not be misconstrued that Income Insurance was coming from a position of weakness. We remain financially strong, and our capital adequacy ratio is sustained at a healthy level. Today, we are a market leader in health and general insurance and are most trusted amongst insurers in Singapore.
However, the fact that Income Insurance’s market share in life insurance has been weakening since 2010 indicates that strengthening Income Insurance’s ability to compete more effectively is necessary. This is especially so when we continue to face intense competition and significant shifts in our operating environment.
Shareholder Participation in Long-term Value Creation
In addition to removing the restrictions that we faced under the co-operative structure to access strategic growth options and capital; corporatisation also enabled us to potentially unlock our equity value. In the interest of shareholders, all cooperative shares were converted, pari-passu, to the corporate entity, Income Insurance’s shares on a 1-for-1 basis during corporatisation even though ordinary co-op shares were redeemable and could not count towards Tier-1 capital, unlike permanent shares.
As a shareholder of Income Insurance, you are now participating in the company’s economic interest and its growth and will be able to participate in any liquidity event involving the shares of Income Insurance.
On voting rights, all shareholders now have one vote per share compared to ordinary shareholders having one man one vote when we were a cooperative. Correspondingly, minority shareholders now have more voting rights as their vote count has risen to more than 26% compared to less than 1% previously, when we were a co-op.
Securing a Suitable Strategic Option for Growth
The Board’s and Management’s priority has always been to create long-term value for Income Insurance and all our stakeholders, including our policyholders and shareholders. As such, prior to corporatisation in 2021, we also considered different strategic growth options such as regionalisation, merger and acquisitions, as well as joint ventures.
We had embarked on corporatisation to give the company operational flexibility and platform to access these strategic options and access to capital to drive its growth ambition and create value for all our stakeholders, including our policyholders and shareholders.
Allianz’s Proposed Offer for Income Insurance
The Board and management had been reviewing Income Insurance’s business going forward, its ability to regain market share in Singapore and expand its business into the region, as well as new product innovation and other initiatives. The consensus was that to do well and grow, Income Insurance needed to find a partner and shareholder to help with these priorities.
It was with this objective that, Income Insurance re-initiated the process of looking at potential partners and finding the most suitable one who shares our vision and goals for the business and community.”
It was important to us that our potential strategic partner has deep expertise as a regional or global player in the financial or insurance sector, including strong capabilities in asset management, and possesses capital strength to safeguard our long-term financial resilience.
On these fronts, Allianz ticked the boxes. Allianz’s expertise as a global leader in insurance can strengthen Income Insurance’s competitive position in Singapore and enable Income Insurance to access its regional scale and networks. This is especially important in a highly saturated insurance market that is dominated by regional and global players.
Secondly, Allianz’s solid track record as a global leader in asset management could have enhanced our investment capabilities for the benefit of policyholders.
Thirdly, Allianz’s financial strength would have provided additional support to us, where required, especially in times of extreme crisis.
The backing of two strong institutional investors, NE and Allianz, would have strengthened our competitiveness and establish us as a composite insurance powerhouse as we integrate our capabilities in distribution, partnerships, products and people with Allianz’s global and regional resources and expertise. It would have also further safeguarded our ability to fulfil our enduring purpose of empowering better financial well-being for all.
Importantly, a viable liquidity option was a persistent, strong and increasingly urgent request from our minority shareholders, who have been supporting Income Insurance from its early days and now need the liquidity to support them in their ageing years, If Allianz’s offer were approved, launched and accepted by shareholders, these shareholders would have a share liquidity option to unlock the value of their shares at S$40.58 per share. Such a liquidity option was a request that many shareholders have put forth since we corporatised.
To facilitate this and prioritise their request, the minority shareholders would be accorded priority to tender their shares and only after that, would NE tender its shares on the last day of the offer and only to the extent that will result in Allianz holding at least 51% of the shares of Income Insurance. This was done expressly to ensure that the minority shareholders’ interests were not prejudiced.
We would like to assure shareholders that we are keeping our options open and are continuing to explore different share liquidity options, which can include a share buyback programme. We will update shareholders of any material development accordingly.
Proposed Capital Optimisation Does Not Weaken Financial Position
Next, I would like to address any perception that Allianz’s proposed capital optimisation would weaken our financial strength.
Firstly, it is important to know that there was no commitment to conduct a capital optimisation. However, Allianz had included the capital optimisation proposal in their preliminary business plan that it submitted to the MAS.
At that point in time in the process, Allianz’s preliminary business plan, which included the proposed capital optimisation, was not for approval by the current Board of Income Insurance or NTUC Enterprise.
If the Offer were formally launched, based on the process stipulated under the Singapore Code on Take-overs and Mergers, all shareholders would have been informed about the details of the Offer, including the possibility of a proposed capital optimisation, via the composite document that would have been made public. However, the government raised concerns about the deal on 14 October 2024, the Offer was withdrawn on 16 December 2024 and thus, it was not launched.
At the point of the Pre-conditional Offer, the Board’s fiduciary duty was to ensure that the proposed transaction was launched in the best interest of Income Insurance, including its stakeholders, policyholders and shareholders.
The Board was of the view that Allianz’s offer for S$40.58 per share of Income Insurance shares was in the best interest of Income Insurance and its stakeholders, taking into account Allianz being able to lend its expertise as a global leader in insurance, which I had shared earlier, to strengthen Income Insurance’s competitive position in Singapore.
Allianz’s proposed capital optimisation was not a guaranteed outcome. It was contingent on Income Insurance’s business performance, market conditions in subsequent years and the organisation’s solvency and capital requirements at the time. It would also require approvals by the future Board of Directors at the time of the capital optimisation exercise, shareholders (requires at least 75% approval at a special resolution), and the MAS and possibly the High Court of Singapore. All these approvals would have been required before any potential capital optimisation exercise could have taken place.
These safeguards would have been in place to ensure that Income Insurance will always retain its financial strength, and that the capital and cash reserves it has following any capital optimisation, if it were to happen, will be sufficient to meet its business requirements and maintain policyholders’ interests.
In fact, a capital optimisation is a recognised and lawful corporate action under the Companies Act. It is commonly undertaken by financially sound companies to optimise their capital structure or return surplus capital to shareholders.
Being able to do so is a mark of financial strength as the company must have a strong capital base and buffer to implement a capital optimisation plan successfully.
In the statement delivered by Minister Edwin Tong on 14 October 2024, he said, “MAS considered the planned capital optimisation from a prudential point of view, in accordance with its regulatory mandate. Based on the plans submitted, MAS did not have reason for concern as Income Insurance was projected to continue to meet regulatory capital requirements with a healthy margin even with the capital optimisation.”
The main concern of MCCY was that it was not confident that the deal would not affect the ability of Income Insurance to carry out its social mission. One key point was that there was no clear binding provision in the deal to ensure that Income Insurance’s social mission will be discharged, though MCCY accepts that NE made in good faith its commitment to maintain Income Insurance’s social mission. We will take MCCY’s concerns fully on board.
Carrying Over the Co-op Surplus to Corporate Entity
Now, I would like to give clarity on the public perceptions that surfaced during the proposed deal.
The first is about the surplus fund of around S$2 billion that we carried over from NTUC Income, the co-operative society, to Income Insurance, the company, and what the surplus fund was used for.
Firstly, the surplus fund was the profits that Income Insurance had accumulated since its inception in 1970. Typically, such surplus must be transferred to the Co-operative Societies Liquidation Account or CSLA when a co-operative ceases and is wound up, according to the Co-operative Societies Act.
At the time of corporatisation, the Income Insurance co-operative was granted an exemption by the Government to carry over the surplus funds to support and continue the business of the current entity, Income Insurance Limited. This was because we were not ceasing the business but changing our form from a co-operative to a corporate entity.
The carrying over of the accumulated surplus was necessary and fundamental in ensuring that we remained solvent to discharge our legal and regulatory obligations so that we seamlessly protect the interest of 1.4 million policyholders as the company transitioned from a co-operative to a corporate entity. In short, without these surplus funds, Income Insurance would not have been able to continue the business.
Therefore, the surplus fund was not returned to the CSLA given that the Government accepted our reasons for the exemption and granted us the exemption.
We Are Fully Aligned with Our Purpose
I would like to say that since our founding years, our mission has been to be a fully commercial business competing effectively by providing affordable, inclusive insurance solutions and generating profits for unions and to be financially stable so that we could discharge our legal and regulatory obligations to protect the interest of our policyholders and shareholders and to empower financial well-being for all.
Over the years, this mission has remained steadfast, even as we moved from being a co-op to a corporate entity to continue to fulfil those principles.
Income Insurance’s continued efforts to make a difference to society and communities is also contingent on this ability to run a healthy, profitable insurance business. It is what allows Income Insurance to make contributions such as the S$100 million committed over 10 years, since 2021, to support communities.
Always Acted in Good Faith – Committed to Putting People First Always
To conclude, I would like to state that in the last three years, from corporatisation to the pursuit of the proposed transaction, on reflection, we could have done more to engage our stakeholders better.
However, I also want to emphasise that we have always acted in good faith with regard to our duties as a Board.
As we celebrate Income Insurance’s 55th anniversary this year, I want to take the opportunity to thank all our shareholders for your continued support and trust. We are committed to deliver sustainable value and be in a stronger position to empower the financial well-being of Singaporeans.
Stepping Down as Chairman of Income Insurance
I have been serving as Chairman for the last seven years – four years at the co-operative and three years with Income Insurance. I believe that now is the right time for me to take on additional responsibilities at NTUC Enterprise.
Steering Income Insurance over the years has been personally both challenging and rewarding. It has also been a source of pride because I genuinely believe the significant progress we have made over these years has positioned Income Insurance well for future success. The Board’s decisions have always been guided by what is in the best interests of Income Insurance and all our stakeholders, including our policyholders and shareholders.
While Income Insurance’s competitive reality has changed over the years, it is undeniable that we continue to enjoy strong trust and loyalty, and the true value of this trust and loyalty shows up most in challenging times. The fact that we remained the most trusted insurer in Singapore and our policyholder base stayed constant last year validates that trust and loyalty that Singaporeans have in Income Insurance.
The progress over the last seven years would not have been possible without the support and commitment of my fellow directors, Andrew and the management of Income Insurance, as well as all of you, our shareholders and policyholders. For that, I would like to offer my heartfelt gratitude to all of you. It has been a privilege working with and for you.
To helm the Board of Income Insurance, the directors are unanimously proposing that Ms Joy Tan, the lead independent director, takes over as Chair. Of course, this is subject to her successful re-election at today’s AGM and regulatory approvals.
I would like to assure shareholders that Joy has the experience and competency to lead the company forward and we are confident that this move is in the best interests of Income Insurance and its stakeholders.
With that, I will now pass the time over to Income Insurance’s Chief Executive, Andrew Yeo, to share key performance and business highlights.
Annex B – Dr Goh Keng Swee’s Speech at the 1969 Modernisation Seminar
1969 NTUC Modernisation Seminar
Date: 18 November 1969 · Time: 1200 hours
Goh Keng Swee
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SINGAPORE GOVERNMENT PRESS STATEMENT 64 0032 602 MC.NOV/16/69(FINANCE)
SPEECH BY DR.GOH KENG SWEE, MINISTER FOR FINANCE, AT NTUC DELEGATES SEMINAR OF "MODERNISATION OF THE LABOUR MOVEMENT" AT THE SINGAPORE CONFERENCE HALL, ON TUESDAY, 18TH NOVEMBER, 1969, AT 10 Α.Μ.
It has been evident for some time, that the labour movement has been in a state of depression, if not of demoralisation. No doubt the passing of the new Employment Act and by a socialist Government which has enjoyed the support of the broad labour movement has come as a disappointment to the rank and file membership and possibly even to some in the leadership. The Employment act enjoins upon the labour movement higher standards of discipline, restraint in wage negotiation and, generally, a greater awareness of the social responsibility of organised labour in the larger framework of the national interest.
It is to the credit that organised labour has accepted both the spirit and the letter of the Employment Act. Considering the somewhat hectic past of the trade union movement, this may come somewhat as a surprise to observers. In the early history of the trade union movement in the post-war years when influence of the Communist Party of Malaya was dominant the new standard of excellence by which a union was judged was militancy of the membership. The labour movement became an important area of the political struggle for independence. Further when the boss is in many instances a citizen of the imperial country, bashing him is not only a rewarding activity, it is also a patriotic one.
We all agree that all this is part of the past. And yet in the new situation facing the movement, it is curious how the old instinctive responses survive. No doubt many of the old vanguard will ask the question "If bashing the boss is to be foregone, what is there left for the labour movement to do?" And the answer provided by the organisers of this seminar is "Quite a lot."
I wish to congratulate the NTUC and all those who took part in preparing for this seminar, particularly those who produce the excellent series of study papers, on facing up to the challenges of the times squarely and not ducking the issues. Without a doubt, the labour movement is now at the crossroads. It can take a new direction, develop new fields of endeavour and thereby grow from strength to strength. Or it can take the other turning, sulk away in resentment and despondency, and then be cast into the limbo of history.
I would like to think that the labour movement will take the positive road, the road to greater, more meaningful and possibly, more difficult means of participation in the national life of the Republic. I would like to take this opportunity not to discuss history and philosophy appropriate to the labour movement, important though those subjects are in their context. I would like to discuss certain practical problems which the labour movement would encounter should it take the positive road which I hope it would.
I want to confine my discussion to a relatively narrow field, namely, how organised labour can develop the co-operative movement in the Republic, to its own advantage as well as to the national advantage.
An excellent background paper has been prepared for the seminar and I would like to supplement this paper by suggesting a practical approach, a correct strategy if you like, whereby the co-operative movement in the Republic, now in very rudimentary form, can develop as an important element of the broad socialist movement.
There are, as a paper noted, several forms of co-operatives: Consumer Co-operatives, Rural Co-operatives, Industrial Co-operatives, Co-operatives for Housing, Credit, Insurance, Investment and so on. In my view, the potential for growth of the co-operative movement if supported and sustained by organised labour are excellent, provided the right strategy and the right methods are employed.
But before I go on to suggest the growth strategy for the co-operative movement, let me first lay down certain principles under which such a movement will have to operate in the Republic.
The first principle is that the co-operative must be fully competitive with private enterprise. It cannot expect privileged treatment by the Government. We want sturdy co-operative units and extension of preferences to the movement will result in weak structures and not robust growth. I underline this point because anxiety has been expressed both privately and in public by businessmen in the Republic that the Government intends to extend privileged treatment to enterprises in which it has a financial interest. Such fears are completely without foundation. It has not been and will not be the policy of the Government to single out individual enterprises for favoured treatment. This also applies to co-operative ventures which the labour movement may sponsor in future.
The second principle, which derives logically from the first, is that the labour movement should engage in co-operative enterprises in those fields in which it has a natural built-in advantage. In so doing, it will be easier for the co-operatives to compete successfully with private enterprise.
The third principle is that the highest standards of integrity must be established and maintained. This would imply, in our state of development, that there must be one central authority which supervises co-operative enterprises launched by Trade Unions and will have the power to take remedial action where weaknesses in this respect are detected. Such authority, I believe, rightly belongs to the NTUC.
The fourth principle is that the co-operative must have effective management. I will elaborate on this point at a later stage.
I will now propose a strategy of development which, if those four principles are observed with fidelity, will ensure successful and rapid growth of the co-operative movement. Let us first take a lesson from the experience of co-operatives in other countries. These have not grown up purely as a result of ideology or dogma, nor because people believe in socialist principles, but to fulfil practical needs. Second, growth has been slow and, often, painful and difficult. But eventually, co-operatives grow to very substantial size not because of any feather-bedding by the Government, but by the strength developed by the movement itself.
In Singapore, however, we would like to avoid, if we can, slow, difficult and painful growth. Just as we have to develop industries in a hurry, so must we achieve, in co-operative development, in years what others took decades. To do this, I believe that it is essential the co-operative movement should start with a firm and solid financial base.
In our industrialisation programme, if we had not started up the Economic Development Board with a fund of $100 million, it is unlikely that we would have achieved the industrial growth we did. Now let me immediately disabuse your mind of any prospect of a similar bonanza to start up the co-operative movement. The labour movement must find the money itself, without any financial assistance from the Government. The first step in our strategy, therefore, is to solve the problem just how to build this financial base.
One possibility of building the financial base could be to start a Co-operative Bank or a Workers' Bank or something like that. I would, however, advise against this. People will not have confidence in the Bank, unless they have confidence in those who are starting it. Unless the co-operative movement has already behind it a string of successful enterprises, it is unlikely that people will put money in a co-operative bank, except perhaps the small group of loyal and faithful members. Regrettably, these are seldom people of substantial means.
I suggest that the financial base could be built upon a Life Insurance Co-operative. The insurance co-operative should not, at any rate in the initial stages, move into other fields of insurance such as fire, marine, motor and general insurance. There is no advantage that a co-operative enterprise enjoys in those fields over private enterprise. It is otherwise in respect of life insurance.
Private enterprise life insurance business depends on a large corps of salesmen, in return for whose services substantial commissions and rebates are paid. In the special multi-racial and multi-lingual society of the Republic, an insurance sales canvasser, unless he is an exceptionally gifted and versatile person, is restricted in his field of activity by virtue of language, education and class.
As compared with this, the labour movement straddles all barriers of community and language, and even, to some extent, of class. There is a widespread network of contacts which extends through many strata and sections of our community and which has no counterpart in private enterprise. This network is formalised in structures such as individual trade unions, their branches, shop stewards and so on. For the purpose of publicity, mass education on the benefits of life insurance, sales of policies, this network provides the life insurance co-operative with a clear advantage over private enterprise.
For instance, individual unions as well as the branches may benefit financially from the activities of the insurance co-operative as they may legitimately retain the commissions or rebates which normally would go to the insurance canvassers. Competitions can be arranged between unions and branches in the spirit of socialist emulation. I need not elaborate on these possibilities, but I would urge that if unions were allowed to retain commissions and rebates, those should be vested in a separate fund usable only for co-operative development.
But there is another aspect to this. And this is whether a life insurance co-op would be fulfilling a genuine social need. Unless this is so, there is no reason to expect that it will be successful. In my opinion, there is a genuine need for members of the working class to take out life insurance policies. If the need is not fulfilled, it is because private enterprise cannot reach these strata of society or the workers themselves do not understand the value and benefits of taking out such policies. Because social security in Singapore is in an extremely rudimentary form, the death of a wage earner almost invariably results in a harsh and cruel fate for the widow and surviving children. They often are reduced to immediate and appalling destitution. Life insurance taken out by workers would alleviate such hardships. Further, even if the risk against which the worker is insured, that is, of premature death, does not eventuate as would be the case for most of the insured, premiums paid on life insurance policies and annual bonuses received, will accumulate as a valuable form of savings for these people for their old age.
To the labour movement as a whole, a co-operative life insurance enterprise would provide a good financial base. For instance, if no more than a quarter of trade union registered members took up policies with premiums averaging, say, $150 a year, this will mean a cash flow of some $5 million a year. With an annual cash flow of $5 million, it should be possible to accumulate a fund of a respectable size within a few years. Of course, there is no reason why actual performance could not be considerably better than $5 million a year. The potential market is not restricted to union members; it can extend to all employees as well as to small businessmen, hawkers and taxi-drivers and others who work on their own account. The outcome depends largely on the intensity of intelligent effort put in.
The next type of co-operative which I would recommend for early growth is the Consumer Co-operative. Experience of the labour movement in other countries shows that, given sustained effort and dedicated leadership, this kind of co-operative is not too difficult to establish and can take permanent roots in society. In Singapore, a Co-operative Consumer Society was established in the early post-war years when there was a shortage of consumer goods. The Co-operative, however, died when shortage disappeared. The lesson here is that it is necessary to propagate the principles of the co-operative movement so as to ensure membership loyalty.
The best way to start a co-operative is probably to select a good locality in one of the major housing estates where a good number of trade union members live. Possibly some part of Queenstown may be suitable. Jurong may offer some possibilities; one of the larger firms there is running a thriving co-operative for its members. The first Consumer Co-op should be started as a pilot project. If the top union leadership were to lavish care and attention to its growth, the consumer co-op should succeed. After some time, the leadership would have valuable experience which can be used to good effect in starting up co-operatives in other housing estates. Once a network of co-operative shops has been established and the advantages of consumer co-ops made apparent to all members, the movement could develop its own momentum of growth with the growth of population, improvements in standards of education and increase in personal income and wages.
But I should sound a word of warning. There is little gravy in the retail business in Singapore and much effort, dedication and an enormous amount of ingenuity and skill, will be needed if the Consumer Co-operative were to succeed.
Housing co-operatives also offer a promising field of development. It is, however, very specialised work and you will need a good band of workers with professional qualifications, experience, zeal and dedication. It is better to wait until the Life Insurance Co-operative has accumulated sufficient funds. At that stage, the Insurance Co-op will no doubt want to invest some money in real estate and that will be the time when it may be willing to finance a housing co-operative.
I may mention here that Government employees through their Housing Co-operative are able to own houses of their own on reasonable terms. The Government assists this Society by extending loans to meet the cost of such houses. The Insurance Co-operative will perform this function for the Housing Co-op.
The Co-operative Bank, I regard as an essential element in the later stage of co-operative development. If and when the Insurance Co-operative has established itself on a sound basis, with accumulated funds of $20 to $25 million, and when the co-operative movement has established a string of Consumer Co-operatives, and when the Housing Co-operative has got off to a good start, the time may come to consider setting up a Co-operative Bank. By that time, I expect the broad base of the co-operative movement led by the trade union movement, would have won the confidence and participation of a sizeable part of Singapore's population. It would have behind it several major successes. It would have experience in the management of financial and business affairs. That would be the time to think of starting a Co-operative Bank.
As regards other types of co-operatives, the NTUC study paper mentions Producers' Co-operatives and notes the fact that Ex-Detainees Association has succeeded in establishing a Producers' Co-operative engaged in the production of shoes. In this enterprise, the Government advances the money in the form of a loan, to pay not only for the training expenses of the ex-detainees, but also for the purchase of machinery and equipment. Though still in its infancy, the Co-operative shows every sign of promising growth.
Another Producers Co-operative consisting of members who are ex-political detainees has been launched. This is in the field of ornamental ceramics. A group of eight are undergoing training. The second Co-operative undoubtedly faces more formidable challenges than the Shoe Co-op. They are mainly concerned in making souvenirs for the tourist trade and clearly there are difficult matters of design of product which have to be solved, as well as the marketing of their output. However, with the assistance of the Tourist Promotion Board, we hope that these problems can be solved.
I make this point to show that Producers' Co-operatives, are quite a tricky business. This explains why, under a system of free enterprise, there have not been many successful instances of Producer Co-operatives. Where those have emerged and survived, as in Israel for instance, they are the result of special historical circumstances.
So far as Producers' Co-operatives are concerned, I suggest that the matter be treated realistically. It is easy enough to produce study papers to show that this or that kind of Producers' Co-operative has a potential. But unless you have the people who are willing to put in the effort and sustain it over a long period, you are not likely to achieve much. The ex-detainees are good material for Producers' Co-operative because they have been unemployed a long time and some local employers, enlightened in other ways, are somewhat chary about giving them employment, for reasons which we can understand but not sympathise with. So unless there are union members who are highly motivated, for one reason or other, with the desire to start up a Producers' Co-operative in a trade in which they have the necessary basic skills, I suggest that you do not give much further thought to this.
As for the other forms of co-operatives, Agricultural Co-operatives, Investment Co-operatives and so on, I see no special advantage which the co-operative movement can enjoy in those fields and suggest that such time and energy as people can spare be better directed elsewhere.
But whatever type of co-operative you decide to establish, whether it fails or whether it succeeds depends as much on one factor alone as on all the other combined. And this is the factor of Management. If you have good, keen effective management, then any kind of co-operatives that you establish, even the Producers' or the Agricultural Co-operatives, will succeed. On the other hand, if you have a lazy, fumbling, ignorant, indecisive kind of management, even the most promising project will fall apart in your hand.
This is not the place to expound the principles of business management. However, I think both the NTUC leadership and the trade unions will have to adhere to certain principles very strictly, if the co-operatives they establish were to have any chance of survival.
The first principle is that the staff of the co-operative, be it the top executive or the general run of employees, should be recruited entirely on the basis of merit. The co-operative should not be made the dumping ground of loyal and aged union members who are tired of their present employment and believe that they deserve a more congenial occupation at better rates of pay. Nor should appointments and promotions to any position in the co-operatives be subject to political pressures or influence. Merit and performance must be the only criterion. Staff recruited on unsound principles cannot be properly disciplined and trained. Favouritism, intrigue and eventually complete demoralization will set in and reduce the organisation to a moribund condition.
The second principle to be observed is that while it is proper that the professional staff of the co-operative be held responsible to a committee, Board of Directors or whatever the governing body be called, it should be given considerable scope for the exercise of initiative, judgement and enterprise. The committee or board should not interfere in the day-to-day management of the co-operative. Its duty is one of laying down policies: guidelines and general supervision of affairs of the co-operative.
There are other principles of good management, such as staff training programmes, effective audit and accounting systems, but these are of a specialist nature and I will not deal with them here.
These then, are some of the opportunities as I see them of how the trade union movement can move into new and productive fields of endeavour. The Government, while it cannot extend direct financial assistance in launching any of these co-operative enterprises, would be willing to assist in whatever other ways it can, such as for instance, in giving technical assistance in the formation of the co-operatives. But the principal task must be faced by the trade union movement itself.
The movement is faced with an unprecedented challenge created in the new situation where the simple traditional virtues of militancy and struggle are of little relevance. It must seek a new role in society and in seeking, and eventually performing, the new role, it will need to adapt to the changing environment.