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June 15, 2017

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Home » Business » Finance

Insurance chief turns over his duties

Source: AP | 00:01 UTC+8 June 15, 2017 | Print Edition

THE Chinese insurer that owns New York City’s Waldorf Astoria Hotel said yesterday that its chairman has turned over his duties to other executives following a report he was detained by regulators amid accusations of possible financial misconduct.

Anbang Insurance Group’s Chairman Wu Xiaohui was “temporarily unable to perform his duties due to personal reasons,” said a one-sentence statement on the company’s website. It said Wu had authorized other executives to do his work. It gave no other details.

On Monday, the Caijing magazine reported that Wu, who founded Anbang in 2004 and built it into one of China’s biggest insurers, was detained last week by insurance regulators.

Citing unidentified sources, the magazine said authorities told the company about the detention but gave no reason for it.

Spokespeople for Anbang did not respond to phone calls or e-mails. The China Insurance Regulatory Commission did not respond to questions sent by fax.

Anbang has been under scrutiny since a multibillion-dollar global string of asset purchases, including buying the Waldorf for US$2 billion, raised questions about how it was paying for its buying spree.

The privately held company said the money was raised from shareholders. It denied a report by another magazine, Caixin, in April that Anbang improperly used payments from policyholders to increase its capital base.

More recently, the company has suffered a series of setbacks including failing to complete several foreign takeovers, including the proposed purchase of US-based Fidelity & Guaranty Life for US$1.6 billion.

In May, Anbang was ordered to stop selling two financial products that regulators said violated industry rules.

Other Chinese insurers have also been investigated following complaints of reckless speculation in stocks and real estate. Xiang Junbo, chairman of the Chinese insurance regulator, is under investigation by the Party’s anti-corruption agency.

Regulators say reducing financial risks in the Chinese economy is a priority this year. Rising Chinese debt levels have prompted concern about the stability of the country’s financial system.

Wu rarely talks to reporters or appears in public, but Caijing said he attended a series of public events in recent weeks. That included a May 12 meeting called by the insurance regulator to study a speech by President Xi Jinping about financial regulation.

Anbang said it raised 50 billion yuan (US$7.4 billion) from investors in 2014. That increased its registered capital fivefold to 62 billion yuan, the biggest among Chinese insurers.

Caixin’s April report said at least 30 billion yuan of that money was payments from policyholders.

The magazine said it was channeled back into the company through a complex ownership structure.

Anbang has more than 30,000 employees serving 35 million clients and has interests in life insurance, banking, asset management, leasing and brokerage services.

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