Insurer NTUC Income proposes converting to a corporation from a co-operative

Singapore one dollar bill

Singapore insurer NTUC Income has proposed a corporatisation exercise to convert to a company from a co-operative, according to a filing to SGX Thursday.

Under the proposal, NTUC Income will transfer its insurance business and assets to a new company (NewCo), called Income Insurance Ltd., and the co-op will be liquidated, the filing said. Completion is expected in the second half of the year, subject to approvals, the filing said.

“The NewCo, under the Companies Act, will have more flexibility in accessing capital to grow its business. Unlike co-op shares, the value of the NewCo shares will not be capped at par value (S$10/share),” NTUC Income said. “Under the corporate structure, the NewCo will have flexibility when distributing net surpluses and is not subject to a statutory cap on dividends that it declares to shareholders.”

Corporatisation will provide the insurer with operational flexibility and access to strategic growth options on an equal footing with other insurers both locally and regionally, NTUC Income said.

“This will build on Income’s recent foray into Indonesia, Malaysia, and Vietnam through strategic local partnerships with leading players in the insurance, broker and insurtech arenas via the Insurance-as-a-Service model,” NTUC Income said.

The insurer noted the operating environment has changed significantly, and it now faces a mature domestic market, changing regulatory requirements and increased competition from insurers with extensive scale, compounded by technology players entering the sector.

Ronald Ong, NTUC Income’s chairman, said in the statement, “We see corporatisation as a strategic and essential pivot for Income to scale its business quicker locally and regionally, invest in growth channels and markets, as well as digital capabilities to effectively compete more equitably with other insurers. More significantly, we will be even more responsive to changing customer needs via insurance solutions that speak to today’s digital-first lifestyles and customers.”

The corporatisation exercise won’t impact policyholders, distribution channels or business partners, NTUC Income said. Members who own co-op shares will hold the same number of NewCo shares, the filing said.

The insurer will hold an extraordinary general meeting (EGM) to seek members’ approval for the legal status change, the filing said.

NTUC Income was created in 1970 to fill Singapore’s need for essential insurance for underserved workers, but it now offers a broader range of products.