TR EMERITUS

Written by Our Correspondent PBM Jack Neo is really living up to his new-found "fame" as the "Tiger Woods" of Singapore judging from his ravenous appetite for the opposite sex ranging from teenagers to mature women. Shin Min Daily compiled a series of flings that PBM Jack Neo was allegedly involved in: Woman #2 (after Wendy Chong) Ex actress in 30s: Insiders claimed that both addressed each other as "dear" or "darling". Woman #3 Former acting student in mid-20s: Acted in many of PBM Jack Neo's movies and variety shows. Woman #4 Ex actress in mid-20s: According to Shin Min Daily, she always took a ride home with PBM Jack Neo after filming and appeared to be "intimate" with him on several occasions. Woman #5 Former acting student in mid-20s: Went on dates with PBM Jack Neo several times. Woman #6 Former employee in her 40s: Left the PBM Jack Neo's company after affair was discovered by his wife Irene Kng who told its staff never to mention her name again. Woman #7 Hotel employee in her 30s: She still keeps in touch with PBM Jack Neo though she is already married with a child. Woman #8 Script-writer in her 40s: Shin Min Daily reported that she often discussed about sex with PBM Jack Neo in their online chats. Woman #9 Former acting student in early 20s: Claimed to have thrown herself at PBM Jack Neo. Woman #10 Former acting student in mid 20s: Rumored to have a holiday together with PBM Jack Neo in Thailand. Perhaps PBM Jack Neo is simply heeding the PAP's call to boost Singapore's flagging birth rate by his "procreative" activities which may explain why George Yeo has been calling on Singaporeans to rally around him.  Read More →

By Damon Yeo Two international brands which Singaporeans will be familiar with are to become one very soon, after Prudential PLC agreed to buy AIA (Asian insurance arm of AIG) for a whooping US$35.5 billion. The deal is a direct aftermath of financial crisis over the past few years and will change the face of the insurance industry forever. Background Two become one Before the financial crisis in 2007, American Insurance Group (AIG) was the by far the largest underwriter of commercial and industrial insurance in America and has an unrivalled presence in Asia (ex-China). All these changed on 16 September 2008. The Group suffered a credit rating downgrade and overnight it was required to post huge amounts of collaterals. It did not have enough cash reserves to do so and it immediately faced the threat of bankruptcy. The United States Federal Reserve Bank (Fed) considered the possible impact of the meltdown of AIG and decided to rescue it with a US$85 billion loan, just days after deciding to let investment bank Lehman Brothers die a natural death. Soon after that, AIG’s financial woes had become clear. Prior to 2008, it had begun to dabble in the high-risk-high-return business of monoline insurance, where they underwrote insurance on risky and complex credit-linked financial structures. By Sept 2008, banks and investors who had bought insurance from AIG had begun making multi-billion claims from the insurer whose cash reserves are running thin. Financial Armageddon happened and AIG needed to be saved. With AIG being technically nationalised, the Fed’s long term plan for it was to wind it down over time and sell off parts of it to recover the amount of bailout. AIA was the most lucrative piece of business owned by AIG. Since early 2009, there had been speculation that AIG had planned for an initial public offering (IPO) for this Asian unit but it was always clear that Prudential PLC, a rival British insurer, was interested. This announcement concluded a negotiation process which had lasted almost a year where there was much haggling over the price Prudential will pay. The acquisition in numbers The amount Prudential had to pay AIG is quite staggering. On the day the deal was announced, Prudential’s market capital was just above £15 billion. This is just two-third of the amount which they are expected to pay AIG. To raise that cash, the British insurer is expected to undertake a rights issue to raise £20 billion (the rest will be paid to AIG in terms of securities). There are already reports that Prudential might approach Temasek Holdings to support this fund raising exercise.[1] If Temasek decides to step in, it will become a shareholder of Prudential. GIC already holds a 0.5% of the British insurer. And if this rights issue is carried out as planned, it will be the largest UK fund-raising ever. AIA has approximately 320,000 agents and 24,000 employees in the Asia-Pacific region and this deal will absorb all of them under Prudential umbrella. AIA has 23 million in-force life policies, all of which will be transferred to Prudential as well. The new business is expected to shift the Group’s profits from Asia from 46% to 88% - realigning Prudential’s geographical focus almost entirely. The impact British economy Interestingly, since the announcement of this deal, Prudential’s shares had fallen 18%, wiping almost £2 billion off its market capitalisation. The market certainly expressed pessimism on this deal. Part of this is probably because of the failures of previous multi-billion takeovers, like that of RBS over ABN-Amro. Over the same period of time, the British Pound fell to new lows against the US dollars as investors expect a significant future outflow of Pound to purchase dollars for this deal. On a side note, this takeover by Prudential is actually a refreshing change for British companies on the whole. Over the past decade or so, traditional British companies and brands had been sold to overseas buyers, including the likes of Jaguar, Lotus, Manchester United and more recently, Cadbury. However, with the British financial institutions, they had been gobbling up overseas businesses. This deal will further accelerate the shift of focus of the British economy to financial services and away from manufacturing. Singaporeans For policy holders of both insurers, change is unlikely to come overnight. As with most other massive takeovers, rebranding will come slowly. In the near future, consumers will still likely to see the presence of two different insurance brands. AIA, despite all the woes of its parent company, is still a strong brand name in Asia, with almost 90 years of history. Prudential may decide to keep it and operate it as a standalone, like how DBS had managed POSB to date. The bigger change in store is probably for the ten thousand or so Singaporeans whose livelihoods are linked to either insurer. According to statistics, there are about 3,500 Prudential Financial Consultants and 4,000 from AIA operating in Singapore. TR had managed to speak to a couple of them but it appears that even to them, the plans for the merger are not crystal clear at the moment. Kelvin, 29, who has been with AIA for over 8 years told us, “What we heard about this deal is from the media. There has not been much information from management. We were told that it is ‘business as usual’.” It is probably fair to say that details of how the merger will work for Consultants like Kelvin is still not being finalised. As with many mergers, the finishing touches on the realignment of ground operations may take years to complete. However, what are always inevitable in mergers are overlaps and redundancies, especially for non-sales staff of the insurers. Note: Do you work for Prudential / AIA? Are you a policy holder of either insurer? What do you think of this deal? We will like to hear from you so do leave us comments. [1] http://online.wsj.com/article/BT-CO-20100303-703828.html?mod=WSJ_Deals_LEFTLatestHeadlines About the Author Damon is a proud graduate of Nanyang Technological University with a degree in Accountancy. He is currently working in the finance department of a UK Bank.  Read More →

Written by Our Correspondent PAP MP and Deputy Secretary-General of NTUC Halimah Yacob has dismissed the findings of a global study done by Swiss bank UBS last year which found that Singapore's workers earn less and can afford less than their counterparts in other major cities. The study, which was not reported by the state media, was analyzed and published as a three-part series on the Temasek Review in August last year and had garnered more than 100,000 page views collectively so far. They were also circulated widely in cyberspace which prompted PAP MP Inderjit Singh to raise the question in Parliament last week. Madam Halimah Yacob claimed that the study "collected data from too few firms and made some faulty assumptions" without substantiating her statements. "If the UBS figures are to be believed, the average Singaporean experienced an 8 per cent drop in gross wages, from $11.85 an hour to $10.85 an hour, between 2006 and 2009," she said. The PAP has always used international studies to promote itself, but when the statistics don't appear favorable to them, they are discounted. Madam Halimah Yacob added she finds it "very puzzling" as as statistics and anecdotal evidence here showed the opposite: a significant jump of about 20 per cent in wages over the period. Based on government estimates, the median hourly wage is now about $14 an hour. "The discrepancy could have come from the limited sample of firms in the UBS study. The study's figures do not give statistical averages as it covered only a few companies for each profession and city," she suggested. It is not unusual that such studies cover only a limited sample of firms. Besides, the same conditions apply to all the countries being surveyed, including Singapore. The UBS study showed that Singaporeans have the lowest wages and lowest domestic purchasing power among the Asian Tigers even if Madam Halimah's "official" figures were used. An international bank like UBS will not put its credibility at risk by conducting a flawed study. Madam Halimah should explain why Singapore have such miserable wages and spending power comparable to Russia, Malaysia and Bolivia despite being a first world country instead of dismissing the study immediately.   The UBS Series: >> Part 1: Singapore has lowest wages and domestic purchasing power among Asian Tigers >> Part 2: Moving towards a Russian standard of living >> Part 3: Why Singaporeans are paupers in a first world economy  Read More →