Insurers called on to improve disclosure

China's regulators have said insurers must improve information disclosure on issues including capital source when it comes to equity investment in public companies.

The official statement on June 27 comes amid an escalating clash between listed developer China Vanke Group Co Ltd and its largest shareholder, Baoneng Group, a private insurance conglomerate.

The insurer and its affiliates have aggressively purchased Vanke's shares in the public market through what Vanke have called a hostile takeover to become the developer's largest shareholder.

Zhou Yanli, vice-chairman of the China Insurance Regulatory Commission, says the priority is getting insurers to comply with disclosure regulation and notes that equity investment in public companies is a normal practice by insurance firms, as it meets their need for asset allocation.

Zhou was responding to a question on insurers' equity investment in public companies during a panel discussion on June 27 at the World Economic Forum in Tianjin.

Cash-rich Chinese insurers, such as Anbang Insurance Group Co Ltd, have been aggressively increasing their shareholdings of public companies in the open market since last year. Their high-profile purchase of public companies, including Vanke, has sparked questions about their funding sources and the possible risks associated with their aggressive investment.

The regulator has stepped up its scrutiny by demanding that insurance firms conduct stricter stress tests on their assets and liabilities, and cap their investment in equities, real estate and other financial assets to no more than 20 percent of their total assets.

lixiang@chinadaily.com.cn

(China Daily Africa Weekly 07/02/2016 page25)