Sun, May 07, 2017 - Page 16 News List

Regulator takes aim at Anbang

CORRUPTION:In a widely expected move, the Chinese State Council dismissed the Insurance Regulatory Commission chairman, the subject of a corruption investigation

NY Times News Service, SHANGHAI

A Chinese regulator on Friday announced that it had taken disciplinary measures against the Anbang Insurance Group Co (安邦保險集團), a financial behemoth that has tried to invest tens of billions of US dollars overseas, for the improper sale of two investment products.

The moves by the China Insurance Regulatory Commission come against a backdrop of broader worries about the nation’s financial system, in addition to ones about the insurance industry.

Many foreign economists and investors on Wall Street have expressed misgivings about China’s rapid accumulation of debt, particularly at state-owned enterprises, since the global financial crisis in 2008 and 2009.

Chinese regulators began stepping up their scrutiny of banks several years ago and have been discouraging some aggressive lending and money-raising programs.

Partly in response to that, real-estate developers and others who needed to borrow large amounts of money began turning to insurers, which rapidly expanded their financial activities and raised the money to do so by selling a wide array of often speculative investment products.

The insurance regulator said it was barring Anbang from selling two of its investment products.

In an uncommonly sweeping warning to the insurer, the regulator said Anbang should pay “high attention” to its full range of investment products and “fix the work on product development and management in strict accordance with supervision policies and requirements.”

Anbang said that it had no immediate comment on the commission’s order.

The Chinese State Council on Friday announced separately the dismissal of China Insurance Regulatory Commission Chairman Xiang Junbo (項俊波), who has been the subject of a corruption investigation. The government has not linked that investigation to Anbang.

Xiang’s dismissal had been widely expected after Chinese anti-corruption investigators announced a month ago that they had investigated him over “severe violations of discipline.”

No successor was announced.

Xiang has not commented publicly about the investigation since it was announced. The targets of anti-corruption inquiries are typically held in custody and are sometimes subjected to harsh interrogation.

Anbang has been a leader among insurers when it comes to using wealth management products, a class of lightly regulated investments that promise higher rates of return than conventional investments, but that also carry higher risks that might or might not be disclosed.

The company came to international prominence in January when its chairman, Wu Xiaohui (吳小暉), met with Jared Kushner, US President Donald Trump’s son-in-law and close adviser, at the Waldorf Astoria Hotel in New York. The two met to discuss the possible sale to Anbang of a Kushner family stake in the redevelopment of a Manhattan skyscraper, 666 Fifth Avenue, but those talks ended in March as the proposed transaction became increasingly divisive on both sides of the Pacific.

Anbang bought the Waldorf Astoria for nearly US$2 billion in 2014, among US$16 billion in overseas acquisitions it made over the past few years.

The company, started 13 years ago, has assets of almost US$275 billion, a growing portion of which comes from the sale of wealth management products instead of insurance policies, according to Caixin, a Chinese investigative magazine.

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