China Releases Once High-Flying Anbang From State Custody

(Bloomberg) --

China’s two-year state custody of Anbang Insurance Group Co., a poster child for a slew of Chinese companies that expanded globally and took on too much debt, ended Saturday as the regulator said it had secured private investment.

Authorities took control of the 2 trillion yuan ($285 billion) conglomerate in February 2018 after former Chairman Wu Xiaohui was arrested -- and later jailed -- for fundraising fraud. They initially set themselves a 12-month timeline to raise cash by jettisoning non-core assets such as luxury hotels, while preserve Anbang’s main insurance operations and finding strategic investors. That deadline was later extended.

After considering qualified private companies and designing an “appropriate” shareholding structure, the government has “basically secured social investors,” the China Banking and Insurance Regulatory Commission said on Saturday without identifying any.

With the government’s newly created Dajia Insurance Group now able to operate normally, the company was released from state custody as scheduled, according to the statement.

It was one of the CBIRC’s key tasks to see Anbang, or what is now left of it, placed back into private hands so that the China Insurance Security Fund Co., which now controls Anbang and Dajia, could exit in an orderly and safe way. Foreign investors from Cerberus Capital Management LP to Swiss Re AG were said to have held discussions about potential investments in Anbang, Bloomberg reported in 2018.

The CBIRC also said that all of Anbang’s 1.5 trillion yuan ($2.1 billion) of medium- and short-term investment products have been paid back on time. Dajia now houses the life insurance, pension and asset management units along with parts of its property insurance business. Some of the toxic assets involved in Wu’s case have been kept outside Dajia, Bloomberg reported in May.

Beijing-based Dajia’s five-year or longer-term products accounted for more than 75% of its life insurance business last year, a noticeable improvement from Anbang’s reliance on shorter-term products. The property insurance unit’s operating cash flow turned positive last year, after underwriting profitability was improved.

Anbang agreed to sell a high-end hotel portfolio to South Korea’s Mirae Asset Management Co. for $5.8 billion in September and has offloaded other assets including Dutch insurer Vivat NV and Hexie Health Insurance Co.

When announcing the takeover in early 2018, authorities said it would last for a maximum period of two years.

To contact Bloomberg News staff for this story: Zhang Dingmin in Beijing at dzhang14@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, James Amott, Andrew Davis

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With assistance from Bloomberg