SHANGHAI (Reuters) - Chinese electric vehicle (EV) giant BYD said on Tuesday it is working on a potential acquisition of Yi'an P&C Insurance Co, an insurer that was 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 would use it to start 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 among nine firms 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 jail on charges that included siphoning away public deposits and betraying the use of entrusted property.
China banking and insurance regulator said last year it had agreed to allow Yi'an P&C Insurance to enter bankruptcy and reorganisation procedures.
BYD, the world's biggest seller of battery electric vehicles (BEVs) and plug-in hybrids with sales of 1.86 million cars last year, said on Monday that it expected its 2022 net profit to be more than five times the amount it booked a year earlier.
Electric vehicles are expensive to repair, posing a challenge to insurance providers accustomed to the demands of conventional combustion engine vehicles. Tesla (NASDAQ:TSLA) launched its own insurance affiliate in August 2019, promising rates up to 30% lower than competitors.
($1 = 6.7526 yuan)