News eDaily28 Apr 2017

China:CIRC crackdown bites into Anbang's results

| 28 Apr 2017

Anbang Life and Anbang P&C have both shown a deterioration in their cash flows which were negative at 31 March 2017 compared to a positive report at the end of 2016. The negative figures, presented in 1Q2017 solvency reports released yesterday, mean that policy redemptions, payouts or surrenders were higher than premium revenues.

Industry sources say that the negative cash flows are due to CIRC clamping down on universal products since last year and its suspension of investment-linked non-life products since the start of this year.

Privately held Anbang Insurance Group also this week released its 2016 financial report that showed that its life insurance operations made a profit of CNY15.12 billion (US$2.19 billion), a decline of 20% over 2015.

In addition, its solvency ratio was lowered to CIRC's red-alert level of 150% at 31 December 2016, compared to 987% 12 months previously. The company has attributed the plunge to the implementation of the China Risk Oriented Solvency System (C-ROSS) and the expansion of its business last year.

Wu Xiaohui

Meanwhile, Chinese social media networks were abuzz with rumours that Anbang's Chairman, Mr Wu Xiaohui, who was the husband of the granddaughter of the late Chinese patriarch Deng Xiaoping, had been detained on Wednesday by the authorities in Beijing for alleged involvement in illegal loans and potentially other allegations, reported China Money Network.

Chinese authorities have also halted all of the insurance company’s overseas investment deals, according to the reports.

However, there are also contradictory reports that at the time Mr Wu was allegedly detained by the authorities, he was giving an interview with the New Beijing Daily, a state newspaper operated by the Beijing government's propaganda department. The interview, which discussed Anbang's strategy to focus on healthcare and elderly care in the future, was published yesterday.

There have been questions why Anbang has not yet been investigated by the authorities despite the group being aggressive in selling universal products and in investments, when other insurance companies have been taken to task. In addition, Xiang Junbo, the Chairman of the CIRC until recently, is being investigated for serious disciplinary violations. He was removed from the post on 17 April.

Deng Xiaoping's grand daughter Zhuo Ran and Mr Wu are divorced, according to reports last month.


 

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