Ponzi Popping: Anbang WMP Sales Plummet 88pc

Anbang was one of the companies aggressively using the "borrow short, buy long" strategy of funding acquisitions with short-term insurance policy premiums. Now its cash flow has evaporated and the banks are rightly refusing to play musical chairs after the government turned the music off.
Bloomberg: Anbang's Woes Deepen as Banks Are Told to Halt Dealings

Pressure is building on Anbang Insurance Group Co. as Chinese banks distance themselves from the owner of New York’s Waldorf Astoria hotel amid a wide-ranging government probe that landed Chairman Wu Xiaohui in police custody.

Chinese authorities have asked lenders to suspend some business dealings with the insurer, according to a person with knowledge of the matter, who didn’t provide further details. At least six large banks have stopped selling Anbang policies at their branch networks, with some taking action before the government notice, people with knowledge of their operations said.

NYTimes: Anbang’s Sales Dry Up in New Challenge for Chinese Insurers

Anbang’s sales of life insurance policies and investment products, an important source of cash, stopped almost completely in April after tumbling sharply in March, according to Chinese government data released on Thursday. Across the insurance industry, sales slowed in April compared with earlier in the year.

The weakness follows the government’s crackdown on a sector that is supposed to help families and companies cut their financial risks, but has recently become a hub for rampant financial speculation.

...Anbang is now under acute pressure. Its revenue from existing life insurance policies and certain wealth management products was down 88 percent in April compared with the same month the previous year. The rest of the industry was up 4.5 percent in the same period.

Flashback to one month ago: Pop Goes the Ponzi: Rumors Foresea Life Insurance In Trouble

A leaked document circulating on the Chinese Internet shows one of China's most aggressive sellers of universal life insurance is in trouble. Foresea Life was selling policies like hotcakes in order to fund parent Baoneng's takeover attempt of Vanke. The chairman of Baoneng was banned from the insurance industry for 10 years, and now the insurance division might be facing a Ponzi-collapse if it cannot sell enough new policies to meet the cash demand from a ballooning amount of surrendered policies. Last year, policies surrendered totaled 9 billion, an increase of 5.2 times. This year, the 2017 estimated surrender value (estimated by Foresea) is 60 billion, an increase of 6.7 times.

Anbang was also an aggressive seller of these policies, using them to fund acquisitions.

Anbang’s premiums from investment products reached 186.9 billion yuan, a 271 per cent year rise on the previous year. Evergrande Life Insurance’s investment premiums swelled 705 per cent to 23 billion yuan while that for Qianhai Life surged 228 per cent to 50.1 billion yuan, according to calculation by SWS Research.

If insurers use cash collected from universal life products to buy shares in listed companies, they have to issue the products continuously to maintain cash levels, because many buyers surrender them within three years, Li from CMS said.