The vice chairman of the China Insurance Regulatory Commission (CIRC) warned insurers against reckless overseas investments and criticized several insurers for risky investing behavior in overseas acquisitions, Chinese business publication Securities Times reported.
Chen Wenhui, vice chairman of the CIRC, told insurers to be cautious when investing overseas, said the newspaper.
“Blind outbound investment” by insurance players, often with high leverage, involved tens of billions of yuan worth of risks in several cases, Chen said in the report.
“Some companies behave like a little boy rushing into a candy store when making overseas investment,” Chen said.
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The remarks from the CIRC come at a time when the Chinese government is exerting efforts to stop capital outflows that end up putting more pressure on the depreciation of the yuan, as well as negatively affecting the country’s foreign currency reserves.
Several Chinese insurers, such as Anbang Insurance Group, have been engaging in overseas shopping sprees, buying numerous foreign firms and properties.
According to a projection by BNP Paribas, Chinese insurers could increase outbound investment by around US$100 billion in a bid to diversify risks.
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