Market versus mission: What will Income Insurance choose?

Balancing the interests of the insurer's shareholders and policyholders is becoming increasingly fraught

- Kang Wan Chern

For years, shareholders of Income Insurance have pressed the board for a way to unlock the value of their shares and redeem them at market price.

"It's been a request from shareholders at every AGM (annual general meeting). There are 15,000 of us, and we are getting on in age. But there are few options for us to sell our shares beyond its $10 par value," said shareholder S. Nallakaruppan, adding that the dividends, once satisfactory, have also declined.

Now, the home-grown insurer finds itself at a crossroads, where balancing the interests of shareholders and policyholders is becoming increasingly fraught.

On the one hand, minority shareholders, who collectively hold 27.2 per cent in the company, are calling for an exit from their holdings. Until an option is found on this front, the insurer will continue to be under pressure to pay dividends, which have shrunk in recent years.

For the year ended Dec 31, 2024, Income's board proposed ordinary and special dividends totalling 41.6 cents per share, a sharp drop from 64.7 cents the year before.

On the other hand, Income's capital needs are rising amid tighter regulatory requirements and escalating healthcare costs, which drive up insurance claims.

At the same time, more policyholders are feeling the strain of higher health insurance premiums, and public expectations for the insurer to uphold its social mission remain high.

To move forward sustainably, Income should consider confronting its legacy shareholder issues once and for all, so it can shift focus to sharpening its strategy and clarifying its purpose in an increasingly challenging industry.