Minority shareholders request UOI to distribute Haw Par shares, unlock shareholder value

SOME minority shareholders of United Overseas Insurance (UOI) have proposed two resolutions to be tabled at the insurance provider’s upcoming annual general meeting (AGM), in a bid to further unlock shareholder value.

These include distributing UOI’s holding of 4.27 million shares in healthcare player Haw Par Corporation to shareholders of the former, as well as appointing an independent financial adviser (IFA).

The proposal came from a group of shareholders, representing around 2.8 million shares or 4.5 per cent of UOI’s total shares, according to a letter seen by The Business Times.

In response to the letter, UOI chief executive Andrew Lim said that all shareholder requests and questions will be addressed at the insurer’s upcoming AGM in April 2025.

“We encourage all shareholders to attend and participate actively. UOI remains focused on delivering long-term stability and growth for the company and its shareholders,” he added.

In a bourse filing on Monday (Mar 3), UOI also said its board and management “welcome constructive suggestions from shareholders”.

The company is reviewing the matter, and will make further announcements as and when appropriate, it noted.

The group of minority shareholders is led by independent investor Ong Chin Woo. In March 2024, Ong, a former remisier, also led a movement to “protect and preserve” shareholder value at insurer Great Eastern Holdings.

At Great Eastern, he and a group of minority investors proposed to table three resolutions at its AGM – withhold directors’ fees, change the share option schemes of employees, and appoint an IFA – but failed as the company said the request was “not in order”.

In the letter sent to UOI dated Feb 28, Ong noted that the insurer has consistently maintained a robust financial position since the full implementation of the new risk-based capital framework for insurers in March 2020.

Referring to insurance company filings to the Monetary Authority of Singapore for the financial year 2023, the letter said UOI’s shareholders’ fund to total assets ratio was 70.4 per cent, compared with the general insurance sector’s average of 33.5 per cent.

In the same period, UOI’s capital adequacy ratio of 415 per cent was also “considerably higher” than the sector’s 338 per cent average.

“These strong ratios, which are well above industry averages, demonstrate UOI’s capacity to return excess capital to its shareholders,” the letter read.

“Doing so would enable the company to achieve a more optimal capital structure without impairing business growth or the interest of other stakeholders.”

For FY2023, UOI also held a substantial amount of cash and investment securities, where cash represented 15.4 per cent of shareholders’ funds, equity securities accounted for 33.7 per cent, and debt securities stood at 56.1 per cent.

Of its equity investments, Haw Par makes up 27.7 per cent. Its shares also represent 6.6 per cent of UOI’s total assets and 9.4 per cent of its shareholder equity.

Distributing Haw Par shares could help mitigate UOI’s investment concentration risk while preserving cash to support the company’s operational and expansion needs, the letter said.

The shareholders compared the distribution with a special dividend of S$0.67 per share, and found that the former is “more advantageous”, as UOI could thus enhance shareholder value without compromising growth or the interests of other stakeholders, while ensuring sustained financial stability.

For FY2024, UOI is proposing a final dividend of S$0.085 per share and a special dividend of S$0.06 per share.

Meanwhile, appointing an IFA can facilitate shareholders to make informed decisions about their investments in UOI, and help unlock value for UOI shareholders in “a timely and orderly manner” given the strong financial position, the letter said.

UOI and Haw Par are part of the group of companies controlled by the family behind UOB, South-east Asia’s third-largest lender.

According to UOI’s FY2023 annual report, UOB has a 58 per cent deemed interest in UOI through one of the vehicles linked to the Wee family.

The insurer’s board chairman is also UOB chief executive Wee Ee Cheong.

Haw Par’s board chairman Wee Ee Chao is the brother of Wee Ee Cheong, and its CEO is his other brother Wee Ee Lim.