(Reuters) – SHANGHAI (Reuters) -The Chinese electric vehicle (EV) giant BYD said on Tuesday that it is working on a possible purchase of Yi’an P&C Insurance Co., an insurer that Chinese regulators took over two years ago as part of a crackdown on financial conglomerates.
Earlier this month, the Chinese business magazine Caixin said, based on unnamed sources, that BYD would take full control of the insurer and use it to start an insurance business for electric vehicles.
“The acquisition is still going on,” BYD said in a statement about the rumoured deal on Tuesday. It said that it would give more information later.
Yi’an P&C Insurance was one of nine Tomorrow Holdings companies that Chinese regulators took over in July 2020.
Last year, a court in Shanghai fined the conglomerate 55.03 billion yuan ($8.2 billion) and sent its founder, Chinese-Canadian billionaire Xiao Jianhua, to prison for 13 years. Xiao was accused of stealing public money and betraying the use of property that had been given to him.
Last year, China’s banking and insurance regulator said that it had agreed to let Yi’an P&C Insurance go through bankruptcy and reorganisation.
Last year, BYD sold more than 1.86 million battery electric vehicles (BEVs) and plug-in hybrids. On Monday, the company said it expected its net profit in 2022 to be more than five times what it made the year before.
Electric cars are expensive to fix, which makes it hard for insurance companies that are used to dealing with cars with combustion engines. In August 2019, Tesla (NASDAQ:TSLA) started its own insurance company and said that rates would be up to 30% less than those of competitors.
($1 = 6.7526 yuan)
