China yesterday took over Anbang Insurance Group Co (安邦保險集團) for a year and said its former chairman faces prosecution for “economic crimes,” in the government’s most drastic move yet to rein in politically connected companies whose splashy overseas investments have fueled fears of a financial collapse.
The highly unusual commandeering of Anbang signaled deep official concern over the Beijing-based company’s financial situation and comes as the government looks to address spiraling debt in the world’s second-largest economy.
The China Insurance Regulatory Commission said Anbang, which has made a series of high-profile foreign acquisitions in recent years, had violated insurance regulations and operated in a way that could “severely” affect its solvency.
The announcement also clarified the fate of Anbang’s chairman Wu Xiaohui (吳小暉), who was reported by Chinese media to have been detained in June last year.
The insurance regulator confirmed Wu was being “prosecuted for economic crimes,” a startling fall from grace for a man who reportedly married a granddaughter of late Chinese leader Deng Xiaoping (鄧小平).
A statement by government prosecutors in Shanghai said Wu was suspected of fraudulent fundraising and “infringement of duties.”
Established in 2004, Anbang grew from a property insurer into a financial services powerhouse, hitting headlines in 2014 when it bought the landmark Waldorf Astoria in New York for a record US$1.95 billion.
Among other acquisitions, in 2015 it bought US insurer Fidelity & Guaranty Life Insurance Co for US$1.6 billion, South Korean insurer Tong Yang Life Insurance Co for about US$950 million and Dutch insurer Vivat for about US$167 million.
Anbang also made a US$14 billion bid for Starwood Hotels & Resorts Worldwide Inc, eventually pulling out of a bidding war with Marriott International Inc, and was in aborted talks with US President Donald Trump’s son-in-law and key adviser Jared Kushner to redevelop a Manhattan office tower, Bloomberg News reported last year.
Its varied holdings could be at risk now, with the insurance commission saying it would dispose of certain Anbang assets, without giving details.
It is to remain a private company, but the takeover could be extended for a maximum of one more year if a planned overhaul of Anbang’s corporate structure does not proceed as quickly as planned.
The regulator added that Anbang’s current situation was “stable overall” and would be further shored up.
Bloomberg News last year reported that Beijing had ordered Anbang to sell its overseas assets, though the company denied that at the time.
Anbang could not immediately be reached for comment yesterday.
The firm’s Web site claims it has nearly 2 trillion yuan (US$315 billion) in assets.
“Regulators want to solve Anbang’s problems without triggering systemic risks,” Zhou Hao (周浩), an economist at Commerzbank AG in Singapore told Bloomberg. “After weighing [the] pros and cons, it’s the best way.”
Before yesterday’s Anbang takeover, Dalian Wanda Group (萬達集團) had come under particular government scrutiny.
The commercial property company under billionaire chairman Wang Jianlin (王健林) diversified rapidly into entertainment, theme parks, sports and other sectors, but in recent months has sold off billions of dollars in assets after reports it was under official pressure.
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