WSJ: China’s Risky Insurance

China’s Risky Insurance

Recap: Insurance conglomerates are using funds to empire-build and gain influence. Regulators cracked down on insurance companies selling high-return policies that funded risky investments

Don’t forget: The Anbang Insurance Group purchased the Waldorf Astoria in 2014 (it’s par for insurance companies to purchase real estate though typically not landmark hotels) and converted the hotel into condos (not normal)

Insurance in China:

  • Chinese officials spent the past year scolding insurers for taking on too much risk, but the insurers were making money and had enough clout to stave off rule changes
  • Finance conglomerate Baoneng Group used its insurance arm to finance a hostile bid for China Vanke, one of the country’s biggest and best-run developers.
  • The authorities banned Evergrande Life from investing in stocks and suspended Baoneng’s sales of universal life policies
  • A raft of new rules followed, including restrictions on ownership stakes in insurers and limits on risky investments.

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