Another deal collapses for shadowy Chinese insurance giant

So far, the year 2017 hasn’t been so kind to Chinese conglomerate Anbang Insurance, but it looks like the worst could yet be to come. Earlier this week, Fidelity & Guaranty Life terminated its US$1.6 billion purchase agreement with Anbang after it was unable to get regulatory approval by the states of Iowa and New York. Last year, the New York regulator requested more information about the Beijing-based firm’s funding and shareholder structure, causing Anbang to withdraw its application.
 

The insurance giant’s corporate structure is shrouded in secrecy, which created controversy in February when the Trudeau government approved its acquisition of one of British Columbia’s biggest retirement home chains. The deal, a majority stake in Vancouver-based Retirement Concepts, was signed off for Chinese-owned company Cedar Tree Investment Canada. Further investigation revealed Cedar Tree was in fact a subsidiary of Anbang, which has engaged in an aggressive global acquisition program in recent years.
 

That program has screeched to an abrupt halt in recent months, with further negative headlines generated by the firm’s failure to buy the 666 Fifth Ave property in New York. That deal was especially notable in that the seller in this case was Jared Kushner – key Donald Trump adviser and son-in-law.
 

It’s on the home front that Anbang’s real problems may lie, however.

The Chinese government is currently investigating the country’s top insurance official, Xiang Junbo.
 

Xiang, chairman of the China Insurance Regulatory Commission, is being probed for disciplinary violations after Premier Li Keqiang vowed to “harshly punish” corruption in the financial sector. According to a recent report by Bloomberg, regulators are moving to curb aggressive investments by insurers following increased sales of investment products.
 

China’s growing middle class has meant a surge in demand for insurance products domestically, allowing industry giants like Anbang and Ping An Insurance to go on an international spending spree.

Xiang was appointed as chairman of the CIRC in 2011, and soon set about opening up investment restrictions on the nation’s insurers.
 

Since the regulatory crackdown, shares in the Shanghai Composite have slumped, with tensions on the Korean peninsula not helping matters.