The Real Deal New York

China bans Anbang from selling two investment products

Regulatory action against Waldorf owner comes amid scrutiny of its financials
May 05, 2017 11:45AM

Anbang’s Wu Xiaohui and the Waldorf Astoria

Anbang Insurance Group — the Chinese insurer that’s invested heavily in real estate overseas — was banned from selling two investment products by Chinese regulators on Friday.

One of the products had been marketed as a long-term investment vehicle, even though it was effectively a two-year investment product subject to strict government regulation. In a scathing statement on its website, the regulator said Anbang should pay “high attention” to its offerings and “fix the work on product development and management in strict accordance with supervision policies and requirements,” the New York Times reported.

Amid China’s scrutiny of the country’s banking system, insurers like Anbang have become preferred lenders for real estate developers in recent years. Investment products — like the ones that were just banned — have boosted insurance companies’ war chests.

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In a separate move, China’s cabinet dismissed the chairman of the country’s insurance commission, Xiang Junbo, following a corruption investigation.

Anbang TRData LogoTINY has rolled out an array of wealth management products, a risky class of products that promise high rates of return but are lightly regulated.

Anbang, which has nearly $275 billion in assets, bought the Waldorf Astoria in New York for $1.95 billion in 2014.  But its also pulled out of several deals. In January, Chairman Wu Xiaohui met with Jared Kushner to discuss the possible acquisition of Kushner Companies’ 666 Fifth Avenue. Talks broke down in March.

Earlier this month, social media erupted with rumors that Wu had been detained by Chinese regulators — which Anbang adamantly denied . The Chinese investigative magazine Caixin has since published a report questioning Anbang’s finances and characterizing its shareholder structure as being “like a maze.” The insurer threatened to sue Caixin for “malicious” and “inaccurate” reporting. [NYT]E.B. Solomont