China’s Anbang Insurance taken under regulatory control for one year

A special committee led by the Chinese Insurance Regulatory Commission has taken control of the operations of Anbang Insurance for one year.

China’s financial regulators have taken control of Anbang Insurance Group for one year, ending months of speculation about the future of the high-profile Chinese insurer.

According to a statement published on China Insurance Regulatory Commission’s (CIRC) website this morning, Anbang’s former chairman Wu Xiaohui has been sued for alleged economic crimes.

Separately, the first branch of the Shanghai Municipal People’s Procuratorate has also filed a lawsuit against Wu today for illegal fundraising and embezzlement in the First Intermediate People’s Court of Shanghai Municipality.

In order to protect the normal operations of Anbang following Wu’s prosecution, a special committee organised by CIRC and other government bodies, including the People’s Bank of China, China Securities Regulatory Commission, China Banking Regulatory Commission and the State Administration of Foreign Exchange will take over Anbang’s operations, starting today. All the duties of Anbang’s board of directors, supervisory board as well as the shareholder meetings will be suspended.

The statement (in Chinese) also added that the handover will not change Anbang’s debt liabilities with external clients, and its business will continue. The takeover will last until February 22 next year.

Chinese regulators started an investigation into the Beijing-based firm’s operations in June last year, leading to Wu’s reported detention. After he stepped down from his duties, Anbang was effectively being run by CIRC, according to an earlier PERE report citing a source familiar with the matter. Any final decision on the insurance company however was postponed to until after the 19th National Congress held in October last year.

The tumultuous period for Anbang Insurance – one of China’s most prolific cross border investors – also saw the departure of its head of real estate, Theo Cheng, last August. Cheng was responsible for Anbang’s global real estate and real estate-related investment activities, with a focus on overseas investments.

Since then, there has been a visible pause in the firm’s outbound real estate acquisitions. Last March, Anbang ended discussions to buy a stake in a New York City office building from the Kushner Companies, the firm owned by the family of Jared Kushner, President Donald Trump’s son-in-law. According to a report in the Wall Street Journal, the deal would have seen Anbang provide up to $1.25 billion in equity for the planned redevelopment of 666 Fifth Avenue. While no specific reasons were cited for the failed deal, some US lawmakers had earlier raised concerns about the Chinese insurer’s ties to Kushner through the deal, as PERE reported earlier.

Chinese regulator’s continuing scrutiny on outbound investments through intense capital controls has impacted the pace of Chinese investors’ overseas deals. Property consultancy Cushman & Wakefield has estimated that Chinese capital flows into overseas real estate could fall by 30 to 40 percent this year.