CIRC shames 5 firms for weak compliance

China’s top insurance watchdog has named five private equity (PE) firms for failing to file an annual report outlining the exact details of their investment activities involving insurance-generated capital.

The China Insurance Regulatory Commission (CIRC) said on its website that Qianhai Ark Assets Management, Shanghai Dingying Investment Management, CRI, Cindafund Investment, and PICC Yuanwang had weak compliance awareness and problematic internal management, and were ordered to rectify their wrongdoings.

The naming and shaming is linked with the government’s year-long industry clampdown on investment activities by the nation’s insurers, the CIRC said.

China’s insurance sector has been the target of regulatory tightening, aimed at curtailing companies’ access particularly to risky investments, with the purpose of making the industry more healthy and sustainable.

The regulator has particularly targeted aggressive sales of universal life insurance products, which are essentially short-term wealth management products which had been increasingly used to fund corporate raids and acquisitions.

Chinese companies are allowed to invest in funds established by PE firms, but those firms in turn are also required to report the relevant investment activities to the CIRC for closer supervision, which the five failed to do.

The CIRC is also considering a plan to create a “blacklist” of investment institutions, which might be stopped from cooperating with insurers if they are found to have problematic operations.

Several companies have already been blocked from selling such high-risk, high-return products.