When Chinese regulators announced on Friday they had seized Anbang and charged its founder Wu Xiaohui with fraud and embezzlement, few tears will have been shed in the country’s insurance sector.
Traditional insurers have ceded market share in recent years to a group of disrupters led by Anbang, whose rapid rise and reliance on high-cost borrowing have fuelled concerns they pose a risk to China’s financial system.
The new breed of “platform insurers” issued wealth management products with only tenuous links to insurance protection but yields far more generous than those offered by mainstream groups such as China Life, Ping An and China Pacific Insurance Company. Then, behaving more like investment holding companies, they used the proceeds to buy up assets, property and stakes in other companies.