Policy, Special Situations

China’s Insurance Regulator To Take Over Troubled Anbang, Chairman Wu Xiaohui Prosecuted For Alleged Economic Crime

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China’s insurance regulator has decided to takeover Anbang Insurance Group, a once high-flying insurance company headed by Wu Xiaohui, ex-husband to the granddaughter of former Chinese paramount leader Deng Xiaoping. In a statement posted on the China Insurance Regulatory Committee (CIRC), Wu Xiaohui, Anbang’s ex-chairman, has been prosecuted for alleged economic crimes by a court in Shanghai.

"In view of the fact that Anbang Group acts in violation of the provisions of the Insurance Law and may seriously endanger the solvency of the company, in order to maintain the normal operation of the Anbang Group and protect the legitimate rights and interests of insurance consumers, CIRC decided in accordance with Article 144 of the Insurance Law of the People’s Republic of China to take over Anbang Group," stated the announcement.

The takeover will last from February 23, 2018 until February 22, 2019. A special committee organized by the CIRC and other financial regulators including the People’s Bank of China, China Securities Regulatory Commission, China Banking Regulatory Commission, will start managing the company, while Anbang’s shareholder meetings, board and board supervisors are to stop performing their duties. The insurer will continue to operate as usual and its claims and liabilities will not change due to its takeover, said the statement.

Separately, the first branch of the Shanghai Municipal People’s Procuratorate filed a lawsuit against Wu Xiaohui on illegal fundraising and fraud in the First Intermediate People’s Court of Shanghai Municipality, according to a statement posted today on the court’s website. Wu Xiaohui was arrested last June.

Anbang has RMB1.97 trillion (US$310.85 billion) in assets and ranks 139 on the Global Fortune 500 list. It rose to the center stage in 2015 when it announced a US$1.95 billion purchase of the iconic Waldorf Astoria Hotel in New York. Next year, it was one of the leading suitors in a deal to acquire Strategic Hotels & Resorts Inc for a price tag of US$6.5 billion, but backed out at the last minute. These deals are part of Anbang’s series of high-profile deals worth over US$30 billion in total in a short two to three year span.

As Chinese regulators took actions to further tame its aggressive overseas corporate buyers last year, Anbang again made headlines as being in advanced talks to invest in Kushner Company’s 666 Fifth Avenue project, but the son-in-law of U.S. President Trump recently said his company had stopped negotiations with Anbang. Earlier this month, Anbang abandoned its plans to buy U.S. annuity and life insurer Fidelity & Guaranty Life for US$1.6 billion, a deal struck in 2015, after it failed to secure all the necessary regulatory approvals.

Wu Xiaohui has been rumored to be "taken in" by authorities for multiple times over the past couple of years. In April 2017, Wu Xiaohui was rumored to be detained on illegal loans, but the Anbang chief appeared on the same day in an interview with a state newspaper operated by the Beijing government’s propaganda department, dispelling the rumor. But a short two months later, Anbang announced that Wu was unable to perform his duties and has stepped down because of personal reasons.

Deng Xiaoping’s grand daughter Zhuo Ran and Wu Xiaohui have reportedly divorced for a long time, and the Deng family regarded Wu Xiaohui as a "family traitor", according to Chinese media reports citing insiders.

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