Preventing and mitigating financial risks, particularly systemic financial risks, is a fundamental task in financial work. Resolving risks in troubled insurance institutions requires addressing both the immediate symptoms and the root causes; it involves using new entities to take over compliant businesses to protect policyholder rights, but also demands the courage to say no to inefficient, homogeneous supply and push for genuine bankruptcy liquidations and mergers and acquisitions.
Zhongan Property & Casualty Insurance recently received approval to take over the compliant assets and business of Changan Liability Insurance. This is another practical application of the "new entity takes over the business, old shell sheds the debt" model. Given that a series of troubled insurers have yet to be fully resolved, it is perhaps more valuable to examine this case within the broader context of the insurance industry's pursuit of high-quality development.
Looking back, the rise and fall of Changan Liability Insurance stemmed from its aggressive strategy and departure from the core purpose of insurance. As the first professional liability insurance legal entity approved by the former China Insurance Regulatory Commission in 2007, it initially focused on its main liability insurance business and operated prudently. Starting in 2015, it made a massive bet on P2P online lending履约保证保险, failing to understand the underlying credit risks of borrowers and the mismatch in platform capital pools, while also loosening access standards for partner platforms in a drive for scale. This led to cumulative claims exceeding 2 billion yuan. In 2018, the company reported a net loss of 1.833 billion yuan. Despite an injection of 1.63 billion yuan by Guoan Assets and others in 2019 and a relocation to Bengbu, the situation could not be reversed. By the third quarter of 2023, its core and comprehensive solvency adequacy ratios had fallen to -132.48%, net assets were -354 million yuan, and its risk rating was Class D, with annual reports ceasing thereafter. Public information shows that as of 2026, it still had 17 enforcement cases and over 2.35 million yuan in dishonored amounts. The journey from millions in profit to insolvency serves as a clear warning. Insurance is an industry that manages risk; once it deviates from its core purpose, driven by an obsession with scale, and aggressively underwrites risks it does not fully understand or gambles that it won't be the last one holding the bag, risk will inevitably backfire.
Regarding Zhongan Property & Casualty Insurance, public information indicates that on June 18, 2026, it held its founding meeting and first shareholder meeting in Hefei. It was approved for establishment by the Anhui Regulatory Bureau of the National Financial Regulatory Administration on June 30, received its license on July 3, and completed its business registration on July 23. With a registered capital of 4 billion yuan, it was initiated by Guoyuan Financial Holding Group, together with seven other provincial and municipal state-owned enterprises. It legally took over the compliant effective assets and existing policy books of Changan Liability. From that point, Changan Liability ceased operations and will enter bankruptcy liquidation proceedings. Original creditors must file claims with the liquidation group, using legal force to shed historical debts.
This approach indeed protects the legitimate rights and interests of policyholders and avoids regional or systemic financial volatility that could result from a hard landing in risk disposal, reflecting the principle of "stabilizing the overall situation, coordinating overall planning." However, it must be noted or cautioned that this path of "new entity takes over business, old shell sheds debt" in some ways only removes the historical burden from the balance sheet, but it does not cut away the accumulated operational inertia of the original risk institution or the long-standing chronic problems in the industry.
For Zhongan Property & Casualty Insurance, there are three aspects to observe. First, the management team. The former interim head of Changan Liability has been transferred to lead Zhongan, and the original staff have also been taken over by Zhongan. Based on this, a fundamental shift from their existing operational habits is likely difficult to achieve. Although the newly established Zhongan is not required to bear Changan's existing debts through its institutional design, it must take on multiple heavy responsibilities such as honoring policy claims, maintaining team stability, regional business development, and achieving faster growth. Objectively, this requires higher management capabilities than Changan Liability to achieve genuine individual restructuring. However, looking at past cases, successful examples of fundamentally reshaping business models are still unseen.
Second, the governance genes. It is an industry consensus that corporate governance determines success or failure. Just a week after Zhongan's business registration, on July 28, 2026, Guo Shigang, former general manager of Guoyuan Financial Holding Group, was placed under investigation. He had led Guoyuan for over a decade from September 2005 to April 2016, a critical period for Guoyuan's expansion of its financial footprint in Anhui. Changan Liability was one of the outcomes of that era. The leaders of the new entity, Zhongan Property & Casualty, are also personnel from within the same system. Based on past practice, the inertia of the system will not automatically reset with a new license, adding uncertainty to whether substantive breakthroughs in corporate governance based on shareholder equity relationships can be achieved.
Third, the issue of homogeneous development. Behind the series of troubled insurance institutions, while specific shareholder equity and decision-making reasons exist, the core issue remains the chronic problem of homogeneous, low-efficiency competition in the industry. The challenge for Zhongan Property & Casualty is even greater in this dimension. After all, under the umbrella of Anhui province and Guoyuan Group, there is already Guoyuan Agricultural Insurance, a property and casualty insurer. Their business scopes overlap significantly. However, Guoyuan Agricultural Insurance is subject to the constraint that agricultural insurance and agriculture-related premiums must account for no less than 60% of its total premiums, while Zhongan has no such limit, giving it different operational freedom. Prior to this, Guoyuan Agricultural Insurance could leverage its local advantages to smoothly navigate its term. Data shows that in 2025, its annual premium income was 9.411 billion yuan, with a net profit of 313 million yuan, and a balanced mix of auto and non-auto insurance. Now, with the birth of Zhongan Property & Casualty, whether the dual property insurance licenses within the same province and under the same Guoyuan system can be clearly demarcated at the group level to avoid internal resource competition directly affects whether the risk resolution outcomes can be solidified.
On the surface, this might appear to be only an issue within Anhui province or within Guoyuan Group, but a deeper look suggests otherwise. Particularly through the case of Zhongan taking over Changan Liability, one can observe that the deep-seated reasons for the industry's reluctance to decisively and thoroughly clean up risks go far beyond just the technical aspects of risk resolution. In recent years, most troubled insurers have been held by or bailed out by local state-owned capital. Considerations of having a full license for prestige, maintaining the completeness of the regional financial landscape, tax revenue, and employment mean that local governments are unwilling or unable to accept the cancellation of a legal entity license. At the intersection of the insurance industry and local capital, "new entity takeover" has become the greatest common denominator for local state-owned capital to preserve the license name. However, if the industry routinely relies on this path, debts of troubled insurers are forcibly stripped through bankruptcy proceedings, but the business is continued by local state-owned capital setting up a new shell, then inefficient, homogeneous competition cannot be fundamentally cured. Perhaps before long, some institutions will once again become troubled insurers following the same old playbook.
Cases with a similar structure, such as Fuze taking over Junkang, Shenneng taking over Tianan Property, and Dongwu taking over Anxin, are increasing. However, since the risk resolution of the Anbang Group, there has still been zero successful experience where the business model was fundamentally changed and the resolution equated to success. To prevent and resolve insurance risks, we must adhere to market-oriented and rule-of-law principles, and establish a risk disposal responsibility mechanism with consistent rights and responsibilities and incentive compatibility. For troubled insurers that have lost their rescue value, those that should go bankrupt should be bankrupted, and those that should be merged should be merged. The state or local finances should not simply be left to cover the losses. Only then can capital and consumers develop genuine respect for the insurance industry. When capital understands respect, it will not use high leverage to gamble on scale; when consumers understand respect, they will vote with their feet in choosing companies and products. Using new entity takeovers as a transitional measure for individual cases is naturally acceptable, but from the perspective of the industry's long-term development needs, it should not be elevated to a unified industry standard. To some extent, only by combining thorough cleanup with incremental quality improvement can the insurance industry break out of the cycle of "problem arises - troubled institution bankruptcy liquidation sheds debt - new entity takes over quality business - homogeneous operation - problem arises again," and truly implement the eternal theme of preventing and controlling risks.