CIRC bars Anbang from new product issuance for three months
May 8, 2017 Category Finance, Weekly
Anbang Life Insurance, the flagship company of China’s Anbang Insurance Group, the country’s highest-profile cross-border acquirer, has been punished and reprimanded by the China Insurance Regulatory Commission (CIRC) for breaking industry rules. Anbang Life is now banned from new product issuance for the next three months, after the regulator found one of its annuity products had violated rules governing short-term insurance products and disturbing market order. The regulator has also asked Anbang to “immediately” suspend the products that failed to meet regulatory standards. Dayton Wang, Insurance Analyst formerly with Guotai Junan International, said the “most concerning part”, is not the three-month suspension for issuance of new products, “but the potential liquidity crunch Anbang faces if consumers lose confidence in the brand and ask for surrender collectively”. “Given Anbang has been aggressive in issuing short-term insurance policies with flexible terms for surrender, the impact brought by surrender might be bigger than on its peers,” he added. Others, including Brock Silvers, Managing Director of Kaiyuan Capital, a Shanghai-based investment advisory firm, said however they believed the punishment could actually be positive for Anbang. “CIRC’s notice could be good news for Anbang, if it indicates a relatively mild ending to what the market has perceived as a period of political uncertainty for Anbang and its Chairman Wu Xiaohui,” Silvers said. Anbang has also been fending off media rumors last week claiming Wu had been detained by the authorities, since former CIRC Chairman Xiang Junbo was put under investigation in mid April. The company issued an open letter, saying it would take legal action against financial magazine Caixin over what it called “slanderous” allegations involving financial irregularities and the marital status of its Chairman. Caixin Magazine alleged that Anbang lied about its finances to pay for multibillion-dollar acquisitions, making itself look financially stronger by improperly using payments from policyholders to expand its capital base in 2014 while saying the money came from investors. Anbang Insurance Group has more than 30,000 employees serving 35 million clients and diversified into life insurance, banking, asset management, leasing and brokerage services.
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