The report said the insurer was under investigation. Yet, nothing happened. The media turned silent on Foresea.

In February 2015, instead of the much called for tightening, CIRC removed the 2.5 per cent cap of guaranteed return for universal insurance.

The fact is mainland regulators are no less asset-hungry than corporates. The higher the industry’s size, the more say the regulator has. Unsurprisingly, the business went wild.

Last January, regulators allowed Foresea to double its registered capital to 8.5 billion yuan, to finance its rapid business expansion.

By July 2016, the insurers were called to their national service. As the A share market crashed by 30 per cent, CIRC lifted the insurers’ investment ceiling in blue chip stocks by a quarter to 40 per cent.

While the big state-owned companies stayed aloof, various private insurers jumped into the charge.

Foresea and Yao accumulated enough shares to become the controlling shareholder of China Vanke, the country’s largest developer, adding to their shareholdings in 40 other listed companies.

These accumulations were welcomed by Xiang.

“In the international markets, insurers have always been seen as important institutional investors,” he said during a public occasion last March. “Chairman Liu (Shiyu of China Securities Regulatory Commission) should be quite happy about that.”

Yes, everything was a merry party until the battle for Vanke became nasty and political, bringing in top-level intervention and cleaning up.

Now Xiang is belatedly talking about tightening the rules.

So, is Foresea the poster boy of China’s insurance industry, or its scapegoat?

Commentary by Shirley Yam from the South China Morning Post.

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