Caixin
Sep 15, 2020 06:22 AM
FINANCE

Anbang to Disband and Liquidate as Restructuring Ends

Anbang was taken over by regulators in February 2018
Anbang was taken over by regulators in February 2018

China’s once-highflying Anbang Insurance Group Co. Ltd. will apply to the country’s top insurance regulator for dissolution and liquidation, Anbang said Monday. That will put an end to a troubled conglomerate that was a major target in the country’s crackdown on financial risks.

Anbang was taken over by regulators in February 2018 and has since carried out asset sales to reduce massive debts accumulated over years of aggressive expansion. Wu Xiaohui, founder and former chairman of Anbang, was sentenced to 18 years in prison for fundraising fraud and embezzlement.

The state takeover and restructuring of Anbang was part of China’s sweeping campaign to clean up risks in the financial system brewed by freewheeling conglomerates. Several other companies, including Tomorrow Holding, backed by fallen tycoon Xiao Jianhua, CEFC China Energy Co. and HNA Group, are also under government-led reshuffles to dismantle risks.

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In Depth: How China’s Regulators Dismantled a Financial Empire

China’s central bank issued new rules Sunday setting requirements for eligible financial holding companies on registered capital, total assets, and assets under management in a further measure to put financial conglomerates under proper oversight.

Pan Gongsheng, deputy governor of the People’s Bank of China, said Monday in a press conference that financial regulators have prudently tackled the problems relating to financial holding companies. The work to clean up Anbang and CEFC China has been largely completed while the issues related to Tomorrow are still being addressed.

After a two-year state takeover and massive asset spinoffs, part of Anbang’s assets were assumed by Dajia Insurance Group, a company newly created for Anbang restructuring. Dajia, with registered capital of 20.36 billion yuan ($2.91 billion) provided by state-owned Insurance Security Fund and two giant state-owned enterprises, is in the process of inviting strategic investors, Caixin learned.

Regulators’ efforts to dismantle risky assets of Tomorrow followed an approach similar to the Anbang revamp, consisting of measures to defuse debt crises, carve out bad assets and turn the rest of the company into a viable business.

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Caixin’s coverage of troubled Anbang

From humble beginnings as a local car insurance business in 2014, Anbang expanded aggressively from 2015 to 2017 by selling unconventional and risky high-yield investment products masquerading as life insurance, known as universal life insurance products. The proceeds from selling the policies fueled Anbang’s overseas assets-buying spree.

Anbang sold 1.5 trillion yuan of insurance as of the end of 2017, mostly short- and medium-term policies. The contracts were due to pay out from 2018 to 2020. The regulator injected state funds to avoid a payout crisis. About 700 billion yuan of short-term insurance policies were converted into medium- and long-term policies underwritten by Dajia Insurance. The remaining 800 billion yuan of policies have been paid out by using the proceeds from asset disposals.

Contact editors Han Wei (weihan@caixin.com) and Bob Simison (bobsimison@caixin.com).

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