Contents

Page

INTRODUCTION 2

VISION & MISSION STATEMENT 3

INTERNAL ASSESSMENT 4

EXTERNAL ASSESSMENT 8

SWOT ANALYSIS 10

STRATEGY EVALUATION 12

CONCLUSION & RECOMMENDATION 15

ANNEXES 16

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Introduction

NTUC Income was established with an initial capital of $1.2 million in 1970, in response to a growing need for affordable insurance. They are Singapore’s only insurance co-operative and a leading life, general and health insurer.

In their 36 years of operations, they have matured into a leading insurer and progressive organization with over 1.8 million policyholders and assets at $18.8 billion. Total premium income for 2005 amounted to $2.1 billion.

Currently, has about 2100 Insurance Advisers, 1,600 office staff and a network of 12 branches located island-wide.

NTUC Income has maintained its "AA" rating by Standard & Poor's (S&P) since 1999. This is the highest rating among all domestic insurers in Asia. This rating reflects a strong financial profile, flexibility and capacity to meet new challenges.

Income has always placed the interests of our policyholders foremost. They distribute 98% of their surplus to policyholders, which is higher compared to industry practice.

They also provide special benefits to their customers under the concept, "More Than Insurance". Some of these include competitive loans, will writing services, car sharing scheme and home services such as plumbing and renovation.

NTUC Income recognizes their wider responsibilities to the community. Each year they provide generous support to the arts, sports, education, healthy lifestyle, charity, trade unions and the environment. In recognition of their efforts and contributions, they have received numerous awards.

Overview of the Industry

The life insurance industry put in a sterling performance in the first nine months of 2007, sustained by a robust economy and a buoyant stock market. On a weighted basis*, new business premiums amounted to $1.18 billon, representing a strong 31 per cent increase over the corresponding period in 2006.

The traditional tied agency channel contributed to the bulk of new business. Tied representatives were responsible for 68 per cent of new weighted business sales for the period under review.

Bancassurance contributed 18 per cent of new business sales, while licensed Financial Advisers and other channels (including direct) saw their share improve by 6 percentage points to 14 per cent.

( Refer to Annex 1)

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Vision & Mission Statement

Vision: Your Partner for a Better Life

Mission: To provide more than insurance at best value based on co-operative principles.

Values:

Core Values – Dealing With CustomersImmediate - We give prompt response and service to customers.No Hassle - We transact in a simple manner convenient to customers.Considerate - We are helpful and show respect to customers.Open - We are honest and sincere towards customers.

Magnanimous - We are fair to customers and generous in contributing towards the

community.Excellence - We Excel, Innovate and Improve continuously.

Core Vales – For Internal ColleaguesMeritocracy - We judge based on merit, we recognize and reward those who

achieve, and excel.Entrepreneurship - We innovate, do, learn and adapt to achieve the right results.Respect - We find win-win solutions in dealing with our stakeholders:

policyholders, employees, suppliers, NTUC and the community. Integrity - We are responsible and trustworthy, applying the highest ethical,

moral and professional standards in our conduct. Teamwork - We are united and work together positively towards a common goal.

Code of Ethics & Values

As insurance business is dealing with people in financial planning and offering suitable solutions to specific needs, personal private information are highly confidential and all Advisers are strictly required to practice according to the code of ethics and values. Insurance Advisers shall:

Place the interest of the client above their personal interest. Build trust with the client. The client will give preference to you on his/her future

insurance needs. Make full and adequate disclosure of all facts necessary to enable the client to make an

intelligent decision. Hold in strictest confidence, and consider as privileged, all business and personal

information pertaining to the client’s affair. Not indulge in unethical practices, which may be detrimental to the client, the company

and the life insurance industry. Abide and conform to the Code of Conduct at all times.

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INTERNAL ASSESSMENT

New Direction Under New Management

NTUC Income's new Chief Executive, Mr Tan Suee Chieh, took over responsibilities in February 2007. The visionary CEO shared his four goals for NTUC Income. He wants the co-operative to be the biggest and best insurance company in Singapore. He target NTUC Income to be a place where customers come to because they know that they can get genuine value for money, with no fads and no strong arm selling. He aims for the co-operative to be a place where school leavers and graduates queue to join.

The co-operative will be investing more extensively in training programmers for employees in the next three years. Mr Tan explained, “You cannot feel good if you are not fit and to be fit and confident, you must be well trained. You need to have the right skills, knowledge, habits and attitudes.”

Work Culture

Internally, NTUC promote leadership qualities by adopting open cultures, top management believes in continuous sharing with all levels of staff, its rich pro family-friendly practices promotes work life balance (eg: flexible working arrangement, time off, child leave, family care giver leave.) They offers positive work environment such as opportunities to upgrade skills through special projects or job rotation.

NTUC Income’s commitment to help staff develop their potential through skills training and the belief in all-round learning has won them the People Developer Award in 2001 and 2003. In 2005 they won Leading Corporate HR Award, which is for organization with innovative HR practices, good corporate citizenship and commitment.

Marketing

NTUC Income recently launched a new branding campaign. Consisting of a TV commercial, print and outdoor media advertising, this campaign revolves around the concept of using ‘hands’ as a symbol of trust and partnership. The TV commercial captures the three different life stages, highlighting the importance of having someone to share the joy of living and give you strength to weather uncertainties. They have better benefits to attract more insurance advisors in order to have achieved greater market penetration.

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Income’s new multi-channel approach involves working with car distributors to capture a larger share of the new car market; working with intermediaries to capture the renewal market; and stepping up its direct sales effort through advertisement campaigns. The co-operative will be adopting a hip marketing brand name, drivo. The 2 new car insurance plans namely: drivo PREMIUM and drivo CLASSIC will be launched in May 2007.

Training & Development

NTUC Income recognized that people are the company’s greatest assets and they provide good insurance knowledge, on-the-job training, job challenges and conducive working environment.

NTUC Income provides more job opportunities to staff and upgrade their skills through special projects or job rotation. By offering both internal & external training courses, they aim to enhance and improve the specific skills of staff, thus, promoting efficiency and higher productivity.

They have excellent training program that covers: Customers service skills Competency in job scopes Supervising people/ People management Entrepreneurial management

Information Technologies Development

NTUC Income was the first insurer in Singapore to install a mainframe computer system in 1980, and the first launch on internet website in 1995.

In 2002, together with Infocom Development Authority and Microsoft launch the community web portal, BigTrumpet and in 2005 they launched the Digital Warehouse. A project that saw 40 million paper documents converted into electronic images. This has given NTUC the corporative an edge over its other competitors, by developing cutting edge IT technologies they are able to stay ahead as a market leader.

Financial Analysis

For the second quarter alone, NTUC Income’s annual premium income (API) grew 104%, more than 3 times the industry’s growth of 30%. Its market share increased from 10.2% to 16%. Its single premium income (SPI) grew 136% as compared to industry’s 53%, increasing its market share from 7.3% to 11.2%.

The year-to-date figures (January to June 2007), NTUC Income’s API grew 889%, compare to the same period last year (2006). This surpassed the industry’s growth of 29% and enabled NTUC Income to make significant market share gains, from 10.5% to 15.3%.

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NTUC Income’s SPI grew 55%, in comparison to the industry growth of 28% and consequently increasing its market share from 10.3% to 12.6%. They continued to strengthen its pole position in the annuities business, achieving 82.2% of the market share, a jump of 14.5% from 67.7% in 2006.

APPENDIX

TABLE-A2nd Quarter figures - Comparison between 2006 and 2007

Annual Premium Single Premium Weighted Premium Annuity2007($m)

2006($m)

Growth%

2007($m)

2006($m)

Growth%

2007($m)

2006($m)

Growth%

2007($m)

2006($m)

Growth%

Income 30.5 14.9 104% 291 124 136% 59.4 26.9 121% 42 39 9%Industry 190.7 146.5 30% 2590 1694 53% 440.3 310.4 42% 66 58 13%Market Share

16.0% 10.2%   11.2% 7.3%   13.5% 8.7%    64.3% 67.0%  

TABLE-BJan to June figures - Comparison between 2006 and 2007

Annual Premium Single Premium Weighted Premium Annuity

2007($m)

2006($m)

Growth%

2007($m)

2006($m)

Growth%

2007($m)

2006($m)

Growth%

2007($m)

2006($m)

Growth%

Income 54.0 28.6 89% 550 354 55% 108.6 63.4 71% 169 73 131%Industry

353.2 273.3 29% 4380 3428 28% 774.1 607.8 27% 206 108 90%

Market Share

15.3%

10.5%

 12.6%

10.3%

 14.0%

10.4%

 82.2%

67.7%

 

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Research & Development

NTUC Income has used a direct effective approach on Research & Development, they invited general public to participate in the market Research Program.

With ready pool of database and established call centre, they have the capabilities to conduct surveys through e-mail and phone interviews. Their telemarketers are specially trained in conducting telephone surveys. They have in-place a systematic survey system that is fully automated and adds on to this service.

Latest Products from result of R&D are:

Revosave: NTUC Income described its latest product, revosave as a revolutionary hybrid product.  An anticipated endowment product, revosave is a first of its kind in the market, combining traditional endowment plan features with an innovative investment-linked component that gives customers the best of everything – security with the potential for higher yields, as compared to other similar products in the marketplace, combined with flexibility.

PayMyUni: Was designed in response to feedback from customers who are parents, and who are concerned about the escalating costs of education in Singapore. In addition, many parents save for their children's tertiary education, but are often uncertain about when exactly the funds would be needed. Another uncertainty is the entry age of their children into a tertiary institution.

Another key internal strength is that they keep their costs low, minimize wastage, while containing to emphasize on good level of service. With cover ensure ratio, they are able to keep their premium rate competitive and give better return to their policyholders.

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EXTERNAL ASSESSMENT

Political, Government & Legal Forces

Health Minister, Khaw Boon Wan, has posed a challenge to insurers to consider value added innovations to encourage people to stay healthy, and to provide incentives for health care providers to focus on health outcomes rather than treatments. NTUC Income supported these ideas of caring not only for the health insurance seeds of the policyholders but also for the well being of the person. NTUC study the practical aspects of these ideas to see if they can be incorporated into the health insurance products features and our arrangements with health services providers.

With CPF privatizing Life Insurance, DPS and Health-care insurance, Medishield & Eldershield, NTUC Income has won the tender to take over the policies and offer more comprehensive benefits with competitive premium to CPF members. These schemes were set up by the government to ensure that the lower income groups would have some form of basic insurance cover at very low cost.

Creating employment: Since 2002, Income has made conscious efforts to hire older retrenched workers and fresh graduates as Customer Relations Officers (CROs). In 2005, 94 CROs were recruited. This is one of the co-operative's on-going efforts to support the government's call to hire older workers and create job opportunities.

NTUC Income is in full support of the Minister’s efforts to drive innovative and improvement through transparency of information and sharing of best practices. Hence, the drive to improve the customer experience by offering the convenience of a Letter of Guarantee (LOG) for hospital admission by CPF members.

Social

Each year, NTUC Income contributes about 1% of their surplus to support the arts, sports, education, healthy lifestyle, charity and the Trade Unions. Last year, their contribution amounted to $2.7 million.

(REFER TO ANNEX 1.)

Technological Focus

Technology has direct impact in modern business model and environment. Using cutting edge technologies, NTUC Income is able to provide useful information on financial planning tips, insurance & investment products & others related services on its website. It also encourages customers to purchase products through online portal.

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NTUC have 3 warehouses to store documents, as such a massive amount of paperwork they faced several issues – labour intensive storage management, slow document retrieval, and they high cost of transporting files. This also led to a loss of productivity among agents and staffs who had to deal with the physical paperwork.

With NTUC new e-warehouse project, it initiated to help the organization transition to a more efficient and paperless environment. The documents could then be retrieved by any authorized staff almost immediately from almost anywhere.

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STRENGTHS, WEAKNESS, OPPORTUNITY & THREATS (SWOT) ANALYSIS

Strengths

Largest general insurer with the dominant share of the motor insurance market, insuring about 33% of all vehicles.

Leading provider of health insurance which offer the popular Incomeshield Plan that has unlimited lifetime coverage.

Having about 2100 Insurance Advisers, 1,600 office staff and a network of 12 branches located island-wide.

Operating efficiently with an expenses ratio that is about 14% points, a ratio that is lower than the industry average. Thus, they can offer lower premium and higher yield to policyholders.

It has maintained “AA” ratings by Standards & Poor’s (S&P) since 1999.This is the highest rating among all domestic insurers in Asia. This rating reflects a strong financial profile, flexibility and capacity to meet new challenges.

Commitment to Business excellence, they were named Insurance Company of the year consecutively in 1998 – 2000.

As NTUC Income is committed to provide excellent customer service, they have Service Indicators that reflects high level of service quality, short waiting time at Branches, Hotline Accessibility manned by call agents. This has resulted 257 of the staffs been accorded the Excellent Service Award (EXSA) 2006 by Spring Singapore for displaying the customer-centric attitude. (Refer to Annex 3)

They are proud to be the fastest in claim processing in the market.

Weakness

Lapse in the internal process – Reflected in Mr Jonathan Lock’s case. (Refer to ANNEX 2.) The new CEO has made a media statement to Straits Times and LianHe Zaobao to highlight his concern. He said that this is a good example of a misapplication of rules and processes, without having regards to the purpose for which they are created. The consequences have been totally disproportionate and unintended by NTUC Income.

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Opportunity

People more concern about financial planning

Singapore is facing aging population

Government encourage higher birth rate with incentives

Government’s subsidy in health insurance

Positive economic growth

Regional market not being served

Threats

Potential development of substitute products by competitors

Rivalry among competitors

Bargaining powers of consumers

Potential entry of new competitors

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STRATEGY EVALUATION

NTUC Income has been using several strategies that have proven effective and making them one of the largest and most successful player in the insurance industry. They have used the following Vertical Integration Strategies, Diversification Strategies and Intensive Strategies:

Forward Integration

New Motor InsuranceNTUC Income has announced a new motor insurance strategy in its bid to regain the top position in Singapore’s motor insurance industry. Its new approach involves working with car distributors to capture a larger share of the new car market; working with intermediaries to capture the renewal market; and stepping up its direct sales effort through advertisement campaigns.

Backward Integration

Singapore’s largest life and general insurer improves network security and stability with Altiris client management suite outsource and development by Altiris, Inc.

Altiris, Inc. offers a full line of Web-enabled solutions that empower organizations to easily manage desktops, notebooks, handhelds and Windows, Linus and UNIX servers throughout the IT lifecycle.

The Challenge: Reduce the time and personnel resources required for application and OS patch

rollouts Achieve a more robust IT infrastructure with on-time patching of application and OS

exploits Gain a complete view of hardware and software assets throughout the enterprise

The Business Values: Rollout of application and OS patches achieved in one-to-two days as opposed to two

months Enhanced hardware upgrade and replacement forecasting and planning capabilities Accurate and up-to-date software license usage reporting Improved client device security from external virus and hacking threats

“It’s the Internet age and people are accustomed to accessing their data instantly from anywhere,” says former CEO, Tan Kin Lian. “We realized that our old system was crippling us. We couldn’t be sufficiently responsive. We were slowing down, and we felt we would lose customers if we continued operation the same way. We had to do much better.” (Refer to Annex 4)

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Related Diversification

SARSThe Threat of SARS had subsided in July 2003 and several employers are worried about the impact on their businesses if many of their workers are to be quarantined in the event of another outbreak of SARS. To help businesses to cope with this risk, NTUC Income had launched the Group SARS Business Continuity Insurance Plan in 1 January 2004.

Foreign InsuranceMinistry of Health has announced the removal of hospital subsidies for foreign workers and with the revision of Ministry of Manpower mandates for all employers to maintain a medical insurance cover for the foreign workers / foreign domestic workers during stay in Singapore, with effect from 01 Jan 2008.

Foreign workers (existing and new work permit and S pass Holders)

Foreign Domestic Workers (existing) – Cover is required when renewing their work permits

Foreign Domestic Workers (new) – cover is required when apply for new Work Permits form 01 Jan 2008

Unrelated Diversification

Travel PackagesNTUC Income now offers comprehensive travel services and attractive holiday packages to policyholders and the general public. Many attractive tour packages, hotel & resort accommodations are usually tied up with travel insurance.

Market Research ServicesNTUC has a group of telemarketing officers specially trained in conducting telephone surveys. Ready pool of database and established call centre, have the capabilities to conduct surveys through email and phone interviews. They have in-place a systematic survey system that is fully automated and adds on to this service. They have provided the market research service to various organizations from different industries. These include petroleum companies, hospitals, statuary boards as well as co-operatives. Their service has benefited and met the objectives of the clients, many of whom seek this service continually to measure their service or reputation rankings.

Market Penetration

Advertisement- BrandingNTUC Income recently launched a new branding campaign. Consisting of a TV commercial, print and outdoor media advertising, this campaign revolves around the concept of using ‘hands’ as a symbol of trust and partnership. The TV commercial captures the three different life stages, highlighting the importance of having someone to

Page 13 of 25

share the joy of living and give you strength to weather uncertainties. They have better benefits to attract more insurance advisors in order to have achieved greater market penetration.

Islamic InsuranceNTUC Income has held a free public forum on Islamic and is currently the only Takaful provider in Singapore that organizes forums for its policyholders twice a year. Through these forums, NTUC Income aims to create awareness and understanding of the Islamic insurance and financial markets in Singapore and Syariah compliant products and schemes.

Product Development

Motorcar insuranceIncome’s has a new multi-channel approach involves working with car distributors to capture a larger share of the new car market: drivo PREMIUM plan allows customers to have their accident repairs done at the car

distributors’ or any workshop. drivo CLASSIC plan under which accident repairs will continue to be done at

Income’s quality workshops.

TakafulTakaful is operated on the Islamic principles of transparency in transactions, fair dealings and cooperation for a common good to assist those in need. The role of Takaful has changed the Islamic financial industry significantly recently. With Takaful growing rapidly in this industry, more and more finance institutions and insurance companies are tapping into this market and launching Takaful products. However, Takaful is still relatively a new concept for most people here.

RevosaveCombining traditional endowment plan features with an innovative investment-linked component that gives customers the best of everything – security with the potential for higher yields, as compared to other similar products in the marketplace, combined with flexibility.

PayMyUniPayMyUni was designed in response to feedback from customers who are parents, and who are concerned about the escalating costs of education in Singapore. In addition, many parents save for their children's tertiary education, but are often uncertain about when exactly the funds would be needed. Another uncertainty is the entry age of their children into a tertiary institution.

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RECOMMENDATION & CONCLUSION

Recommend New Strategies & Implementation

Market Development

Market Development involves introducing present products or services into new geographic areas.

For effective Market Development, there are six guidelines: new channels of distribution that are reliable, inexpensive, and good quality firm is very successful at what it does untapped or unsaturated markets capital and human resources necessary to manage expanded operations excess production capacity basic industry rapidly becoming global

We identify that the current local market is small and saturated, thus, the needs for expansion into new geographic areas. As NTUC Income has very competitive products, quality customer services, effective and efficient business model, the expansion will offer a bigger market share for the company. The regional countries are still developing economies and this is an opportunity for the company to reach out to the unsaturated markets. NTUC Income can duplicate the current business model and customize the insurance products to suit the new markets.

Horizontal Integration

Horizontal integration refers to a strategy of seeking ownership of or increased control over a firm’s competitors.

For effective Horizontal Integration, there are four guidelines: firm can gain monopolistic characteristics without being challenged by federal

government competes in growing industry increased economies of scale provide major competitive advantages faltering due to lack of managerial expertise or need for particular resources

Mergers, acquisitions, and takeovers among competitors allow for increased economies of scale and enhanced transfer of resources and competencies. By joining forces with another competitor, NTUC Income can increase economies of scale and provide major competitive advantage.

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Implementing Strategies

We are aware that successful strategy formulation does not guarantee successful strategy implementation. Usually less than 10% of strategies formulated are successfully implemented. However, on the other hand the greatest strategy is useless if it’s not implemented properly.

NTUC Income being an established organization, they must continue to be more effective in minimizing costs and maximizing returns. They should look in details on the followings:-

1 Marketing Issues2 Finance and Accounting Issues 3 Research and Development4 Management Information System

Implementation activities will include:

1 Altering sales territories2 Adding new departments3 Closing facilities4 Hiring new employees5 Cost-control procedures6 Modifying advertising strategies7 Building new facilities

Implementation decision involves management issues such as:

1 Establish annual objectives2 Policies making3 Allocating Resources4 Altering Organization Structure5 Revising Rewards/Incentives6 Resistance to Change 7 Natural Environment8 Developing a supportive culture9 Adapting to production & operation processes 10 effective Human Resources11 If necessary downsizing

CONCLUSION

We feel that NTUC Income has used the above mentioned Strategies effectively, and with our recommendation of 2 new strategies, they will likely to be a more successful and established player in the insurance industry.

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