Chinese Insurers Better Watch Out
Fraser Howie, co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise” isn’t a fan of the boost in M&A activity that’s taking place in insurance. “Either way insurance companies have become a leading source of deal making in China. But that makes little sense to me – insurance should be a dull and boring business: take in premiums to pay claims. Their assets under management need to be stable and grow steadily” he said. And now Chinese insurance watchdog CIRC is on the lookout for overly aggressive investment activity by insurers. In fact, earlier this month it has banned Anbang Life Insurance from applying for new products for three months after it found one of its annuity products, called ‘Anbang Long Life of Happiness #5 Annuity Insurance’ violated rules governing short-term insurance products since it was structured to return funds to investors after only two years. Bottom Line: some will need to set aside a bigger budget for compliance .