German insurance giant Allianz has abandoned its bid to acquire a majority stake in Singapore's Income Insurance, citing regulatory changes and government concerns about the proposed transaction.

The company initially unveiled its offer in July to purchase at least 51 per cent of Income Insurance for approximately $1.63 billion, a move that would have elevated Allianz to become the fourth-largest composite insurer in Asia.

However, Singapore's government expressed reservations about the deal, with prime minister Lawrence Wong indicating in October that the acquisition could potentially detract from the insurer's mission of providing affordable insurance for lower-income workers.

Renate Wagner, a member of Allianz's management board responsible for the Asia-Pacific region, said: "We respect the Singapore government's decision. We still believe the combination of Allianz and Income Insurance would result in two strong businesses being brought together for the benefit of Income Insurance's policyholders and a growing portion of Singapore's customers."

Income Insurance, established in 1970 as a co-operative to provide affordable insurance to workers, is considered a national icon in Singapore. The insurer ranks among the city-state's four systemically important insurers.

Following the withdrawal, Income Insurance said it would "consider exploring other liquidity options for shareholders to unlock the value of their shares". The company acknowledged that minority shareholders' demand for share liquidity has grown since 2022.

The proposed transaction would have significantly expanded Allianz's presence in Asia-Pacific, a region the company considers strategically important for growth. The insurer has been progressively expanding its Asian investments, including securing approval for an onshore fund management company in China last year.

Despite the setback, Allianz emphasised that Singapore remains an important market, and the company remains committed to its Asian expansion strategy.

The Singapore government has subsequently amended the insurance law, granting itself more power to scrutinise buyouts of insurers linked to co-operatives, demonstrating a proactive approach to protecting national economic interests.

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