The Real Deal New York

Chinese regulators to investigate Anbang amid real estate push

Insurance Regulatory Commission fears liquidity mismatch

May 09, 2016 01:00PM

WaldorfWu

The Waldorf-Astoria (inset: Wu Xiaohui)

China’s insurance regulator plans to investigate Anbang Insurance Group amid its recent U.S. real estate investment binge.

According to a source quoted by Bloomberg, the China Insurance Regulatory Commission is putting together a team of inspectors to look at Anbang’s business model. The agency last week announced stricter oversight of insurance companies’ investments in real estate and private equity.

Anbang, which began a little over a decade ago as a regional car insurer and has close ties to China’s ruling elite, has been one of the most active foreign investors in U.S. real estate over the past two years. It recently bought the hospitality real estate investment trust Strategic Hotels and Resorts (Including the Essex House on Central Park South) from Blackstone for $6.5 billion and entered a $14 billion bidding war for Starwood Hotels & Resorts before mysteriously bowing out. In January 2015, it shelled out $1.95 billion for the Waldorf Astoria Hotel.

Regulators fear that insurers’ focus on relatively illiquid assets like real estate could lead to a liquidity mismatch – meaning they wouldn’t be able to pay off investors and policyholders in the event of a capital run. [Bloomberg] — Konrad Putzier

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