CIRC Orders Foresea Life Insurance Co. to End Its Universal Life Insurance Due to Irregularities

Zhang Feifei / Yicai

2016-12-06

(Yicai Global) Dec. 6 – China’s securities regulator has ordered Foresea Life Insurance Co., a company active in China’s securities market, to withdraw one of its insurance products due to irregularities only a working day after China Securities Regulatory Commission (CIRC) Chairman Liu Shiyu publicly denounced the "barbaric acquisitions" and "regulatory arbitrage" in the securities market last Friday.

CIRC issued a regulatory directive yesterday, saying Foresea Life shall stop its universal life insurance business due to problems identified and is prohibited from declaring new products within the next three months.

The regulation of China's financial sector is carried out by four non-affiliated institutions including the People's Bank of China, the China Securities Regulatory Commission, the China Insurance Regulatory Commission and the China Banking Regulatory Commission. However, experts say there are regulatory blind spots in some areas.

CIRC Chairman Liu Shiyu last Friday publicly denounced some companies’ behaviors in purchase and leveraged buyout in the capital market. He pointed out that “it is not allowed to make ill-gotten money. Some market participants have turned into bandits in the industry from barbarians at the door.” What he calls as "ill-gotten money” refers to the “leveraged buyout carried out with public funds.”