Happy Life Insurance Co., Ltd. (幸福人寿) invested nearly 500 million yuan in Vanke-related real estate projects, only to see the book value shrink to just 4 million yuan by the end of 2024. In March 2025, the insurer initiated a subrogation lawsuit against a Vanke-affiliated company, seeking 654.6 million yuan in principal and interest. The details of this legal action only emerged publicly in the company's second-quarter 2026 solvency report, nearly two years after the loss became concrete.
99.7% of the Money, 0.3% of the Manager's Say
In April 2017, the Zhongcheng Gancan Fund was established. Happy Life, as the limited partner, contributed 498.5 million yuan, a 99.7% stake, making it the sole actual capital provider. The fund manager, Shanghai Zhongcheng Niandai Equity Investment Fund Management Co., Ltd., contributed only 0.3% but held all authority over project operations, post-investment management, and risk disposal. This is a classic case of "the one who pays the bills doesn't call the shots, and the one who calls the shots doesn't pay the bills."
In March 2018, the Zhongcheng Gancan Fund and Shanghai Vanke Investment Management Co., Ltd. each contributed 50% to establish Shanghai Wencheng Enterprise Management Co., Ltd. After peeling back the layers, the funds ultimately reached the defendant in this case, Shanghai Wanrui Real Estate Co., Ltd. The executive lists also align. Zhu Zhenfeng, chairman of Shanghai Wencheng, and Qiu Bin, chairman of Shanghai Wanrui, have both held positions in multiple Vanke-affiliated companies. Happy Life's 500 million yuan traveled through a three-tiered channel: "private equity fund - Vanke joint venture platform - project company," with the final destination being Vanke's real estate projects.
From $500M to $4M, Information Disclosure Delayed by Two Years
According to Happy Life, the fund manager "failed to exercise its rights," allowing the loss to become a foregone conclusion. Happy Life's asset impairment loss for 2024 surged from approximately 50 million yuan in the previous year to 563 million yuan, a year-on-year increase of 1029.79%. On March 25, 2025, Happy Life, acting as a limited partner, filed a subrogation lawsuit against Shanghai Wanrui, on the grounds of a contract dispute. The litigation target is 654.6009 million yuan, totaling 650 million yuan including principal and overdue interest.
Notably, the pace of information disclosure is questionable. The impairment occurred in 2024, but the annual report and solvency report at the time did not specifically disclose this loss. The case was filed in March 2025, but the details were not made public until the second-quarter 2026 solvency report, nearly two years after the loss was realized.
Regulators did not overlook the matter. In April 2026, the National Financial Regulatory Administration issued a fine: a warning and a penalty of 2.31 million yuan. Four violations were listed: material omissions in related-party information, failure to timely and accurately accrue asset impairment provisions, imprudent investment in collective trust plans, and provision of unsecured debt financing to real estate projects. The company responded that these actions all occurred before April 2024 and had been rectified.
Around the time of the penalty, a change in management occurred. The chairman's position was vacant for 18 months until He Liuyi took over in September 2025. Starting in 2026, Wu Xin, Zeng Zhuo, and Wang Wenxiang have been approved to serve as Secretary to the Board and Chief Investment Officer, Chief Actuary and Chief Financial Officer, and Deputy General Manager and Chief Audit Officer, respectively. Guo Jun, the audit head previously flagged by regulators, had resigned during the reporting period.
A $5.2 Billion Default Hole, Vanke Loses $138 Billion in Two Years
The 650 million yuan lawsuit is just the tip of the iceberg for Happy Life's investment risk. As of the end of 2025, the book balance of the company's investment assets involving defaults reached a substantial 5.23 billion yuan, primarily concentrated in the pro-cyclical sectors of pharmaceuticals, real estate, and infrastructure. With total assets exceeding 170 billion yuan, this level of non-performing loan exposure will inevitably strain capital consumption.
Operationally, the company has been on a rollercoaster. In the first quarter of 2026, it posted a net loss of 1.04 billion yuan, and its core solvency ratio once dropped to 72.20%. While operating data improved in the first half of the year, with a net profit of 2.05 billion yuan and a solvency ratio recovery to 91.14%, this short-term recovery does not change the pressure from existing risks. If the 650 million yuan cannot be recovered, the company will lose a significant opportunity to replenish its capital.
On the other side of the lawsuit, China Vanke Co., Ltd. (000002.SZ), which ultimately controls Shanghai Wanrui, is also mired in deep losses. Vanke reported a net loss attributable to shareholders of 49.5 billion yuan in 2024 and a net loss of 88.56 billion yuan in 2025, totaling a loss of 138 billion yuan over two years. As of the end of 2025, Vanke had interest-bearing debt of 358.48 billion yuan, of which 160.56 billion yuan is due within one year, while its cash on hand was only 67.24 billion yuan, giving it a cash-to-short-term debt ratio of 0.42 times. Cash cannot even cover half of its short-term debt obligations. An April 2026 report from Fitch Ratings stated bluntly that Vanke's short-term liquidity remains under severe pressure and it must rely on its largest shareholder, Shenzhen Metro Group, to provide capital to keep operating.
Happy Life's experience is not an isolated case. In recent years, insurance funds have flocked to real estate via private equity, seeking stable, bond-like returns while betting on ever-rising property prices. Now that the market cycle has turned, sales proceeds have dried up, and real estate developers' cash flows have collapsed. When debts cannot be repaid, the fund managers wash their hands of the situation, and all risks flow through the channel, fully exposed to the limited partners who only provided capital without holding any real authority. The outlook for recovering the 650 million yuan is not optimistic.
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