CIRC lifts ban on Anbang’s sales of high-yield products

Resumption of sales could be the regulators throwing the insurer a lifeline, analysts say

CIRC lifts ban on Anbang’s sales of high-yield products

Insurance News

By Gabriel Olano

Controversial Chinese insurer Anbang Insurance Group has been allowed to resume selling high-yield insurance products, which were used to fuel its infamous global acquisition spree.

The China Insurance Regulatory Commission (CIRC) banned Anbang from selling new products in May, accusing the group of damaging the country’s insurance market with its aggressive pricing and unconventional product structures.

In June, Anbang’s chairman, Wu Xiaohui, was reported missing, presumably detained by the government as part of a widespread crackdown on corruption in the financial sector, led by Chinese President Xi Jinping.

According to a report by the Financial Times, the lifting of the sales ban could be a sign that the CIRC is throwing a lifeline to the insurer, which received a credit ratings downgrade from local ratings agency Dagong Global in August due to the ban.

Analysts had said earlier that regulators would not allow Anbang to collapse despite the sanctions, as it could spark a domino effect in the financial industry.

In recent years, Anbang made global headlines for its big-name foreign acquisitions such as New York’s Waldorf Astoria hotel. These purchases were funded by the sales of “universal insurance” which are akin to wealth management products. The CIRC cracked down on these products, citing the sale of short-term products to finance long-term, illiquid assets such as real estate could expose the insurance sector to systemic risks.

“Anbang’s solvency and liquidity position is strong,” a company representative told FT, adding that all its products comply with all concerned laws and regulations.

Related stories:
Chinese crackdown sends insurance premiums into nosedive
CIRC denies pressuring Anbang – insurer may not have to sell Waldorf Hotel after all
Anbang Life gets three month ban from issuing new products

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