Control of Anbang Insurance has been taken over by the Chinese government, according to the insurance regulator, who cited “illegal business operations.”
The Chinese insurance regulator has taken a dim view of Anbang’s growth and expansion, feeling that some of its operations are not suitable and has now also charged its Chairman Wu Xiaohui with “economic crimes.”
Anbang had been operating “illegal business operations that threaten the company’s solvency,” regulators said.
The regulator will take over the operation of Anbang for a year, while also injecting the firm with more “high-quality social capital” while also restructuring its shareholdings, but with the goal of keeping the insurer a private company.
Chairman Wu Xiaohui has been indicted in a court, accuses of fraud and embezzlement of assets.
The China Insurance Regulatory Commission (CIRC) said that the board of directors would no longer continue to perform their duties, and that its investments and asset management would be handled by a regulator imposed group.
Wu had first been detailed last year, as part of the Chinese government’s crack-down on financial firms borrowing, loans and investments.
The government takeover of Anbang will last for one year, the statement from the regulator said, with management now falling to the CIRC, the central bank and other Chinese financial authorities.
Analysts said that the news reflected China’s determination to crack down on financial market irregularities, while also delivering a warning shot. Some analysts said there are real concerns over Anbang’s future solvency.