China Weighs Increased Oversight of Troubled Insurer Huaxia（1）

(Bloomberg) -- Chinese regulators are mulling additional measures to stabilize closely-held Huaxia Life Insurance Co. after its operations were pummeled by the virus outbreak, according to people familiar with the matter.

Options being considered include sending a team of managers from larger state-owned rival China Life Insurance Group Co. to help manage Huaxia’s operations, said the people, who asked not to be identified speaking on a private matter. The move hasn’t been finalized and is being discussed following months of oversight by a task force from the China Banking and Insurance Regulatory Commission, one of the people said.

The regulator didn’t reply to a request for comment. A representative for Tianjin-based Huaxia Life said the company has no knowledge of such plans. Beijing-based China Life Group didn’t respond to an emailed request.

Huaxia Life, along with its rival Anbang Insurance Group Co., had been among the most aggressive buyers of stakes in other companies, as short-term, high-yield products fueled revenue growth. The government seized control of Anbang in early 2018, and has since created a new company to take over most of its businesses and sell off overseas assets, including a portfolio of luxury U.S. hotels.

As recently as 2018, Huaxia was China’s fourth-largest life insurer by market share, and had assets of 586 billion yuan ($83 billion) at the end of last year. Growth has slowed since regulators cracked down on risky products, while a bid by Zhongtian Financial Group Co. to buy up to a 25% stake has languished since 2017.

Huaxia Life in April encouraged staff to take unpaid leave for up to three years to start their own businesses as pressure on profitability mounted amid the pandemic, the regulator’s official newspaper reported at the time, citing an internal company document.

The firm’s profit tumbled 68% last year, according to its annual report, while its solvency ratio, which gauges its ability to settle claims, stood at 136% as of Dec. 31, compared with life insurers’ average 241% as of March 31.

While the insurer doesn’t disclose quarterly results, larger listed rivals Ping An Insurance (Group) Co. and China Life were pummeled in the first quarter.

The insurance industry came under “tremendous pressure,” with combined premium growth slumping 13.6 percentage points from a year earlier to just 2.3%, CBIRC Vice Chairman Huang Hong said in April.

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With assistance from Bloomberg