China’s listed insurance firms could benefit as government crackdown on risky products hits rivals
China Life Insurance, Ping An Insurance, China Pacific Insurance and New China Life are less exposed to short-term life policies and may face less competition as the clampdown hits income at rivals like Anbang
China’s clampdown on aggressive selling of risky short-term life insurance policies could benefit the big four listed firms, China Life Insurance, Ping An Insurance, China Pacific Insurance and New China Life, because they are less exposed to those products, analysts said.
The insurance regulator has since last year moved to curb sales of such policies, which are essentially wealth management products, by companies including Anbang Life Insurance and Foresea Life Insurance, who used the proceeds to fund risky investments. Authorities feared the practice would add systemic risks to the financial sector.
“Big listed companies are benefiting from tightening regulations on aggressive players like Anbang and Foresea,” Tang Shengbo, head of Hong Kong and China insurance and non-bank financials research at Nomura, told a media briefing in Shanghai on Wednesday, citing improving profitability partly because of less competition.
He also saw the possibility of more consolidation or takeovers in the industry, noting that traditional heavyweights could target smaller players, although they would not go after the likes of Anbang and Foresea, which are already big and could be exposed to further regulatory tightening measures.
Other analysts noted that the clampdown had affected premium incomes at the companies under scrutiny.