Chinese Insurer Anbang's Boss Wu Xiaohui Steps Down, Said Detained By Authorities

Robyn Ryan
June 15, 2017

The development added another layer of intrigue to the story of Anbang, whose overseas acquisition spree has slowed in recent months amid increased scrutiny at home and abroad.

However, the company was banned from issuing any new financial products for three months in May by China's insurance regulator, which cited shoddy risk-management practices.

China's central bank was said to be looking into suspected breaches of anti-money laundering rules at the insurer late previous year, while the authorities temporarily banned Anbang's life insurance unit from selling new products last month.

Shares in China Merchants Bank and China Minsheng Banking were trading lower in Hong Kong on Wednesday following reports that Wu Xiaohui, chairman of China's Anbang Insurance Group, the banks' largest shareholder, has been detained by the authorities. Xiang Junbo, the chairman of China Insurance Regulatory Commission, was later removed from office after the government placed him under investigation for "severe violations of discipline".

Spokespeople for Anbang did not respond to phone calls or emails Tuesday evening. Wu hasn't returned since he was taken away at the end of last week, the person told the newspaper.

SHANGHAI, June 14 China stocks fell early Wednesday, led by blue-chips, as sentiment was soured by a media report alleging a probe of the head of financial conglomerate Anbang Insurance Group, plus weak May investment data deepening worries of economic deceleration. Its planned $1.6 billion takeover of USA annuities and life insurer Fidelity & Guaranty Life collapsed in April after failing to get the required US regulatory approval.

Some of the headwinds facing Anbang are not unique to the company.

Anbang is known for acquiring high-profile companies, including the Waldorf Astoria hotel in NY in 2015, and manages $242bn of assets. The New York Times discovered past year that the $300 billion Chinese conglomerate was owned through 39 different companies, many of which turned out to be shell companies that were traced to Wu and his wife, the granddaughter of former paramount leader Deng Xiaoping, in addition to the son of a top military marshall. Anbang denied that Wu had been barred from traveling overseas.

Anbang had been in talks to invest in the proposed redevelopment of 666 Fifth NY, the marquee holding of Kushner Cos., the family company of President Donald Trump's son-in-law Jared Kushner.

But the talks broke off in March after critics of the Trump administration warned of a potential conflict of interest.

In 2016, Anbang paid private equity firm Blackstone $6.5bn for the ownership of Strategic Hotels & Resorts, a portfolio of upmarket hotels and resorts. One hotel next to a major naval base later dropped out of the purchase amid national security concerns. Past year alone, the company spent USD6 billion on a series of luxury hotels in the US. It gave little explanation for abandoning its bid. China's insurance regulators have embarked on an industry- wide crackdown this year, seeking to curtail sales of risky products and restrict acquisitions of listed firms.

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