SHANGHAI, Jan 31 (Reuters) – Chinese electric vehicle (EV) giant BYD said on Tuesday it was working on a potential acquisition of Yi’an P&C Insurance Co, an insurer seized by Chinese regulators two years ago as part of a crackdown on financial conglomerates.
Chinese business publication Caixin reported earlier this month, citing unnamed sources, that BYD would fully take over the insurer and use it to launch an insurance business targeting electric vehicles.
“The acquisition is ongoing,” BYD said in a statement on Tuesday, referring to the reported deal. It said it would release more details later.
Yi’an P&C Insurance was one of nine firms that Chinese regulators seized from the Tomorrow Holdings conglomerate in July 2020.
A Shanghai court last year fined the conglomerate 55.03 billion yuan ($8.2 billion) and sentenced its founder, Chinese-Canadian billionaire Xiao Jianhua, to 13 years in prison on charges that included taking public deposits and the use of entrusted property has been betrayed.
China’s banking and insurance regulator said last year it had agreed to allow Yi’an P&C Insurance to enter bankruptcy and reorganization procedures.
BYD, the world’s largest seller of battery electric vehicles (BEVs) and plug-in hybrids with sales of 1.86 million cars last year, said on Monday it expects its 2022 net profit to be more than five times the amount it made a year ago discussed earlier.
Electric vehicles are expensive to repair, which poses a challenge for insurance providers accustomed to the demands of conventional combustion engine vehicles. Tesla launched its own insurance subsidiary in August 2019, promising rates up to 30% lower than competitors.
($1 = 6.7526 yuan) (Reporting by Zhang Yan and Brenda Goh; Editing by Stephen Coates)