Dagong Global Credit Rating Co. Ltd. announced on August 23 the issuer credit rating of Anbang Life Insurance Co. Ltd. would be downgraded to AA+ from AAA, with a negative outlook, and the bond issue rating of “15 Anbang Life Insurance” to AA from AAA.
The debt repayment environment of Anbang Life Insurance is under pressure, resulting in deterioration of both its wealth creation ability and debt repayment sources. With the supporting conditions for its debt repayment ability weakened, Anbang Life Insurance’s credit status is in decline, according to a statement from Dagong.
In the statement, it lists the primary reasons for downgrading the issuer credit rating of Anbang Life Insurance.
Measures have been introduced successively to highlight the attention and urgency for financial risk control at the policy level, toward strengthening insurance regulations, cracking down on illegal and irregular business activities, and redressing market disorder. As a result, life insurance products with a short- and medium-term duration and financing characteristics are under more rigorous control.
In the meantime, difficulties remain for allocating investment assets in the capital market. Anbang surprised the insurance sector in China with its rapid expansion and mergers in recent years. But Anbang’s existing business model is confronted with major challenges. As unfavorable factors continue to affect its debt repayment sources, risk of further decline in credit status in the future still exists.