Research On Operating Risks Of Private Insurance Financial Groups In China

With the gradual liberalization of insurance funds and the more flexible allocation of assets in China,the insurance market has witnessed rapid development,and the influx of a large number of private capital has increased the activity of the capital market.Private insurance enterprises in China are developing rapidly with sparkling momentum.Many private insurance companies have extended to other financial fields.Their business structure is diversified and they have developed into financial holding companies.At the same time,risk incidents occur frequently in China's insurance industry.Under the new situation,the implementation of the "deleveraging" policy by the regulators has exposed many insurance groups' risks.It reflects that there are huge risks behind the rapid development of private insurance groups in China.This paper takes Anbang Insurance Group as a case study to analyze the risk of mixed operation of private insurance groups in China.This paper makes an analysis of the three main risks in the mixed operation of Anbang Insurance Group,and makes an in-depth study on the operational risks of insufficient solvency,conflict of interest and internal transactions.Through the research,it is found that the radical investment mode,unreasonable asset-liability management and the high sales proportion of universal insurance are the main causes of the insufficient solvency risk.The insufficient solvency risk causes the downgrading of the credit rating of insurance group and the negative impact of the regulatory measures on the internal group,and at the same time harms the investment outside group.The interests of investors and policy-holders will also increase the financial burden.Anbang's highly centralized control,multiple leveraged buyouts and mixed operation are the main risk factors that lead to conflicts of interest.Operating risk of conflict of interest weakens the synergistic effect within insurance group,increases the operational risk of the acquired enterprise and damages the interests of the group because the managers pursue their personal interests.Risk spillover of conflict of interest in the process of mixed operation harms the interests of small and medium shareholders outside the group and the interests of customers.The operating risks of internal transactions mainly stem from the problems of lax internal control,capital recalculation and inadequate supervision in Anbang.In terms of internal impact,internal transactions increase group risk by making high-risk investment based on moral hazard,which may damage group interests in operational risk;in terms of external impact,internal transactions produce leverage effect,which results in systemic risk and greater social hidden danger due to avoidance of supervision.Based on the failure case of Anbang insurance mixed operation,this paper draws inspiration from it,and puts forward suggestions to insurance groups and regulators to optimize assetliability matching management,set up firewall system,improve product structure and strengthen cooperation between regulators.It can be used for reference for risk control of similar private insurance financial groups.