Why Income Insurance may want to consider an SGX listing

Going public is one way for the insurer to draw new investors and boost the capital needed for its social mission.

- Kang Wan Chern

Now that Allianz's $2.2 billion offer to take a controlling stake in Income Insurance is off the table, one alternative for the local insurer to continue growing its business is to undertake an initial public offering (IPO) on the Singapore Exchange (SGX).

Going public would enable Income's retail investors to sell their shares on a convenient and transparent platform, and buy them back again later if they choose, an option currently unavailable to them.

Allianz in July offered to buy a controlling 51 per cent stake in Income. The deal was marketed as a win for both companies.

For the German insurance giant, it was an opportunity to expand its business into Singapore, where it has a regional office but does not operate as a business.

Income said the move would give it access to additional capital and resources, helping it to continue meeting its long-term obligations to policyholders and scale the business for further growth.

The Singapore insurer would get help to become more competitive in an industry where its market share in the life insurance business had fallen to less than 10 per cent by value over the past 10 years, according to data from the Life Insurance Association.

But the announcement triggered a public outcry, with concerns over whether Income would continue its social mission.

On Oct 15, the Government blocked the deal, citing information that Allianz planned to return $1.85 billion of Income's capital to shareholders within three years of the deal's completion. This raised concerns over whether Income would be able to maintain its social mission if such a plan went through.

IPO OPTION Unless Allianz comes back to the table with an offer that is acceptable to the Government, a way for Income to draw new investors and boost the capital needed for its social mission is to go public.