China’s Insurance Watchdog to Wrap Up Foresea, Evergrande Probes in Early 2017

Yicai

2016-12-08

(Yicai Global) Dec. 8 -- China's insurance industry watchdog has kicked off investigations of Foresea Life Insurance Co. and Evergrande Life Insurance Co. and said it will report on the former by the end of January and the latter by end of March.

The China Insurance Regulatory Commission's inspections will focus on governance standards and financial authenticity as well as product and operational compliance, the 21st Century Business Herald reported. The CIRC will severely punish violations, and effectively regulate corporate governance, business development and investment operations, to maintain market order.

CIRC Vice President Chen Wenhui recently said that if insurers bypass regulations through a variety of financial products, solvency regulation and capital regulation will become a Maginot Line -- however well devised -- it will be doomed to failure. Strictly speaking, profiteering through the deliberate circumvention of regulations is a crime.

As an indirect subsidiary of Shenzhen Baoneng Group Co., Foresea Life has been a focus of public attention since Baoneng started buying shares of China Vanke Co. [SHE:000002] in a fight for control of the major real estate developer. Last month, the long-simmering enmity between Baoneng, the largest shareholder of CSG Holding Co. [SHE:000012], and CSG's senior management led to the departure of the glassmaker’s founder-chairman and six other executives.

Evergrande Life's "rapid investment and withdrawal" style also led to a disciplinary interview with the regulator, which required the company to uphold the long-term, steady investment principles of an insurance fund.