News eDaily16 Jun 2017

China:Banks ordered to stop dealing with Anbang

16 Jun 2017

Anbang Insurance Group, whose chairman Wu Xiaohui has been detained in an anti-corruption investigation, faces an added challenge as authorities asked banks to suspend business dealings with the insurer, reported Bloomberg yesterday citing a person with knowledge of the matter.

Separately, at least six large Chinese banks have already stopped selling Anbang policies at their branch networks, according to people with knowledge of their operations. At least two of the six banks had halted selling Anbang policies before Mr Wu’s detention last Friday, the people said.

Anbang’s life insurance unit sold CNY115 billion (US$17 billion) of policies through banks last year, double the amount in 2015 and accounting for 88% of total premiums, according to its annual report.

An Anbang representative said the company’s direct sales channels, mostly through mobile apps, are contributing an increasing share of premium income. The person declined to comment on its relationships with banks.

Mr Wu rose to international fame with a spate of high-profile overseas acquisitions in recent years that also raised questions about the sustainability of Anbang's funding. Chinese regulators last year began stepping up scrutiny of insurers which rely on sales of short-term policies to fund purchases of illiquid assets like real estate.

Chinese investigators are looking into the sources of funding for the company’s overseas acquisitions as well as “economic crimes”, people with knowledge of the matter told Bloomberg on Thursday.

Premium income at Anbang’s life unit tumbled by 88% in April, based on data posted on the CIRC website yesterday. Income from the health insurance arm, Hexie, plunged by 94%, according to Bloomberg calculations based on the data.

Anbang held a meeting of senior executives at the group and its affiliates on Wednesday to discuss how to stabilise staff morale amid the crisis, one of the people said.

The Anbang life unit had CNY1.45 trillion of assets at the end of 2016, including CNY131 billion of cash and cash equivalents, according to its annual report. Its net income declined 19% from a year earlier to CNY15.2 billion. 
 
Anbang’s property and casualty unit held CNY795 billion of assets at the end of last year, more than double the 2015 amount, according to a separate annual report. The unit’s net income rose by 48% to CNY12.4 billion.

Starting with the purchase of the Waldorf Astoria hotel in New York in 2014 for almost $2 billion, Anbang went on a $13.4 billion global acquisition spree that came to a halt at the end of 2016.

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