China's Insurance Regulator Bars Anbang Life from Selling Two

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MARKETS | FINANCIAL REGULATION China’s Insurance Regulator Bars Anbang Life From Selling Two Products Firm also prohibited from seeking approval to sell new products for three months, as China clamps down on insurance sector

Anbang Insurance Group’s headquarters in Beijing. PHOTO: JASON LEE/REUTERS

By Chao Deng Updated May 5, 2017 10:49 a.m. ET

BEIJING—China’s insurance regulator clipped the wings of highflying Anbang Insurance Group Co., barring the firm’s life insurance subsidiary from selling two investment products and seeking approval to sell new ones for three months.

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The China Insurance Regulatory Commission said Friday that Anbang Life Insurance Group Co. marketed rule-bending investment products. The regulator also said the firm disguised a two-year investment product as long-term insurance and didn’t get a necessary signoff from an actuary for another product.

The product that dodged regulations “disrupted order in the market,” and “there has been a violation” of rules on how the firm designs its products, the commission said in a statement.

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An Anbang spokesman declined to comment, saying the life insurer would post a statement on its website.

Friday’s announcement is the latest move by regulators to rein in an insurance sector that has expanded rapidly by offering high-yielding investment products. Anbang, known for buying the Waldorf Astoria Hotel in New York, has been in the authorities’ crosshairs for months, as Beijing becomes worried that aggressive deal-making may add to risks in the financial system.

Anbang’s success in selling an array of high-yielding products has enabled the firm to amass large stakes in publicly listed-firms at home and assets overseas. More than half of the life-insurance subsidiary’s 1.45 trillion yuan ($210 billion) in total assets last year was overseas, according to the firm.

Since late last year, China’s securities regulator has criticized unnamed insurers for acting like corporate raiders—a swipe some analysts took as directed at Anbang among others. The insurance commission followed up by tightening rules on how much insurers may invest in stocks and stepping up calls for insurers to go back to the basics of providing protection for citizens.

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Meanwhile, Anbang’s overseas deal-making has hit roadblocks. A government clampdown on money flowing offshore has made it difficult for companies to complete overseas deals. Anbang’s complicated ownership structure, with multiple layers of holding companies, has drawn scrutiny from foreign regulators.

A proposed deal to buy U.S. life insurer Fidelity & Guaranty Life was called off last month, coming apart after Anbang balked earlier in the year at providing detailed information about its ownership structure to New York state regulators, according to people familiar with the matter. Talks of a deal with the family real-estate firm of Jared Kushner, President Donald Trump’s son-in-law, to buy a New York skyscraper also ended earlier this year.

In the past week, Anbang has been fighting with Caixin Media, a leading Chinese financial publication. A Caixin article questioned Anbang’s shareholder structure and rapid expansion. Anbang, in response, threatened to sue Caixin and its editor in chief, accusing the magazine of publishing false statements about its chairman, Wu Xiaohui, and smearing the company’s reputation. Caixin said it stands by its coverage.

The very public spat, unusual in China, has been taken by Chinese market watchers as a sign that Anbang is falling out of favor with the government. Mr. Wu, Anbang’s usually low-key chairman, gave an interview to a Beijing newspaper last month, portraying the company as in sync with government priorities. He said Anbang planned to focus on traditional insurance businesses, like pensions and medical care.

Write to Chao Deng at [email protected]

Appeared in the May. 06, 2017, print edition as 'China Slaps Curbs On Anbang Life.'

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