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

Page 1 of 25
 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 Customers

Immediate - 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.
- We are fair to customers and generous in contributing towards the
Magnanimous
community.
Excellence - We Excel, Innovate and Improve continuously.

Core Vales – For Internal Colleagues

Meritocracy - 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%.

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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%.

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-A
2nd Quarter figures - Comparison between 2006 and 2007

Annual Premium Single Premium Weighted Premium Annuity

2007 2006 Growth 2007 2006 Growth 2007 2006 Growth 2007 2006 Growth
($m) ($m) % ($m) ($m) % ($m) ($m) % ($m) ($m) %
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
16.0% 10.2% 11.2% 7.3% 13.5% 8.7% 64.3% 67.0%
Share

TABLE-B
Jan to June figures - Comparison between 2006 and 2007

Annual Premium Single Premium Weighted Premium Annuity

2007 2006 Growth 2007 2006 Growth 2007 2006 Growth 2007 2006 Growth
($m) ($m) % ($m) ($m) % ($m) ($m) % ($m) ($m) %
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
15.3% 10.5% 12.6% 10.3% 14.0% 10.4% 82.2% 67.7%
Share

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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.

Page 7 of 25
 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
Page 10 of 25
 which they are created. The consequences have been totally disproportionate and
unintended by NTUC Income.

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

Page 11 of 25
 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 Insurance

NTUC 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

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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

SARS
The 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 Insurance
Ministry 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 Packages
NTUC 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 Services

NTUC 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- Branding
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

Page 14 of 25
 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.

Islamic Insurance
NTUC 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 insurance
Income’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.

Takaful
Takaful 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.

Revosave
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
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.

Page 15 of 25
 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 Issues
2 Finance and Accounting Issues
3 Research and Development
4 Management Information System

Implementation activities will include:

1 Altering sales territories

2 Adding new departments
3 Closing facilities
4 Hiring new employees
5 Cost-control procedures
6 Modifying advertising strategies
7 Building new facilities

Implementation decision involves management issues such as:

Establish annual objectives

Policies making
Allocating Resources
Altering Organization Structure
Revising Rewards/Incentives
Resistance to Change
Natural Environment
Developing a supportive culture
Adapting to production & operation processes
effective Human Resources
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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