An Analysis Of The "Anbang M&A" From The Perspective Of Financial Regulution

With further progress of China's financial deregulation,investment channels of insurance funds become increasingly diverse.As investment in mergers and acquisitions is very popular nowadays,a lot of insurance companies invest insurance funds in mergers and acquisitions.In particular,they sell universal insurances to obtain insurance premiums as the source of investment funds.However,this brings great risks that may affect the normal use of insurance funds.Therefore,financial regulators should pay great attention to this and enhance financial regulation.In this paper,Anbang Insurance Group's investment in mergers and acquisitions was analyzed as a case.By selling universal insurances,Anbang Insurance Group collected a great deal of premiums,which were used for domestic and foreign mergers and acquisitions.The premium of universal insurance is a kind of short-term fund.However,Anbang Insurance Group invested such short-term funds in long-term and low-return projects such as mergers and acquisitions of hotels and licensed financial institutions.Such a mismatch between funds and assets caused not only liquidity risk and insurance market risk,but also the systematic risk that threats the whole financial market.From a perspective of financial regulation,the reason for risks arising out of Anbang Insurance Group's investment in mergers and acquisitions is that the regulator didn't foresee the misuse of universal insurances in China,and thus didn't guide insurance companies' mergers and acquisitions in advance.Although the regulator has imposed corresponding punishments on Anbang Insurance Group and promulgated some new policies to tighten regulation of universal insurances and insurance companies' mergers and acquisitions,it's obvious that the regulator just takes remedial measures rather than risk monitoring and prevention measures.Therefore,there are some deficiencies in China's insurance regulation.Anbang Insurance Group's case suggests the following deficiencies in China's insurance regulation: 1)insufficient intensity of ex-ante regulation;2)lagged regulation actions;and 3)weak awareness of guiding the insurance industry to serve the real economy.Through case analysis and literature review,relevant suggestions for these regulation deficiencies were proposed from four aspects: 1)regulation intensity;2)regulation policies;3)regulation coordination;and 4)guiding insurance funds to serve the development of real economy.As the financial market is systematic,the normal use of insurance funds plays a very important role in preventing and controlling the systematic risk.Therefore,in this paper,through analyzing Anbang Insurance Group's case,deficiencies in the regulation of the current use of insurance funds were explored,and relevant suggestions were proposed to further improve financial regulation.