Regulator suspends product sales of insurers branded ‘barbarians’ for hostile buyouts
China’s insurance regulator cracks down on high-risk policies sold by insurers to fund aggressive acquisitions of listed firms
China’s insurance authority has clamped down on the products offered by insurance units under Baoneng Group and Evergrande Group, after their aggressive takeover attempts of listed companies upset financial regulators.
The move came two days after the chief securities regulator railed against cash-rich asset managers - many of them insurers - selling high-risk products to fund highly leveraged, unsolicited acquisitions, branding them “barbarians” and “robbers”.
Caixin reported on Tuesday evening that the Chinese Insurance Regulatory Commission (CIRC) has sent inspection teams to Foresea Life, a unit owned by Baoneng, and Evergrande Life, to scrutinise their corporate governance and financial health, and to check their products and use of capital are in line with rules.
It follows an announcement by CIRC on Monday night that it had suspended new universal life insurance product sales by Foresea, as well as the online sales of six insurers including Foresea and Evergrande Life - the insurance unit of property giant China Evergrande Group.
The reasons given for the suspensions included exceeding caps on issuing medium- and short-term investment products, misleading sales promotions on the internet and aggressive price competition in the settlement interest rates of universal life products.
Universal life products are essentially high-yield wealth management products that include a life protection component, and usually promising short-term gains. Unlisted companies have been rapidly expanding their businesses, increasingly buying in to the equity market to meet the high returns they’ve promised to investors.