Anbang Insurance Gobbles Up Assets

Anbang has been in the headlines for many weeks in China, partially due to its large investment in Minsheng bank, where president Mao Xiaofeng resigned in the face of corruption charges. However, it was already in the news because it's on a wild buying spree.

Some recent news from the company:

China's Anbang to buy stake in Tong Yang Life
China's Anbang Insurance Group Co has signed an initial agreement to buy a controlling stake in South Korea's Tong Yang Life Insurance for around 1.1 trillion won ($1.01 billion), a South Korean
China based insurance company buys Waldorf Astoria New York.
Anbang Insurance Group has become the new owner of the famous Waldorf Astoria, the landmark hotel on Park Avenue, New York, the company bought the asset from Hilton Worldwide Holdings Inc. for an eye-popping $1.95 billion.
China's Anbang Insurance raises stake in Minsheng Bank
Anbang raised its stake in China Minsheng Banking Corp Ltd to 19.28 percent last week, according to a disclosure published on Monday by the Hong Kong Stock Exchange.

...In December, the Beijing-based insurer raised its stake in Chinese property firm Financial Street Holdings Co to 20 percent, while increasing its shareholding in China Merchants Bank Co Ltd to 10 percent.

....Two months later [December], Dutch insurer Delta Lloyd NV agreed to sell its Belgian banking operations to Anbang for 219 million euros ($245.78 million).

Anbang was founded in 2004 by seven companies including state-owned Shanghai Automotive Industry Group Corp and Sinopec.

The company has received attention from English-language press this week:

The Economist: The big Anbang
Investors have faith in the firm: last year Anbang raised some 50 billion yuan ($8 billion) through two private financing rounds, quintupling its registered capital to 62 billion yuan—more than even PICC and China Life, the biggest state-owned insurers. It also has lots of cash in hand, thanks to a 38-fold increase in revenues from life-insurance premiums to 53 billion yuan in 2014. This has come at a price: Anbang has offered eye-watering yields of nearly 6% on some of its investment products. Yet in 2013 its return on equity was roughly 25%, thanks to good investments of its own.

Mr Wu’s ultimate goal, apparently, is to transform Anbang into a conglomerate, in which insurance sits alongside banking, securities and fund-management. Fawning descriptions in the Chinese media talk of a “Warren Buffett model”, whereby Anbang draws on steady income from insurance to fuel its ambitions. But margins are much thinner in China’s immature insurance market, making Anbang’s income hard to predict. And even Mr Buffett took a few decades to establish his empire.

In China: Southern Weekly apologizes to Anbang for 'false reporting'
The Guangzhou-based Southern Weekly's investigative report into the Beijing-based Anbang — which made headlines last year for winning the bid to buy New York's famed Waldorf Astoria hotel — claimed that Chen Xiaolu, the son of former foreign minister Chen Yi, has been the "real controller" of the company since its establishment in 2004.

The article also alleged that current group chair Wu Xiaohui was previously married to the granddaughter of former paramount leader Deng Xiaoping and hinted that these connections have helped open many lucrative doors for Anbang.

Chen Xiaolu was quoted in the report as denying holding any posts within the company. He also went on social media to reject the allegations the same day the article was released.

Southern Weekly's apology has sparked heated debate among Chinese internet users, many of whom believe there is a bigger story behind the incident and that the more the newspaper says sorry the more suspicious it looks. Others speculated that Anbang must have some very powerful backers to be able to force an adacious paper like the Southern Weekly — which made international headlines for daring to protest government censorship in early 2013 — issue an unequivocal public apology.

Netizens have pointed to Anbang's close links to "princelings" — the offspring of high-ranking Communist Party officials — including the aforementioned Chen, Wu and Zhu Yunlai, the son of former premier Zhu Rongji, who is said to be an independent director of the group.

What's Driving Insurer Anbang's Big Bang?
A January 29 report by Southern Weekend brought public attention to Wu's connections with prominent figures such as 68-year-old Chen Xiaolu, the son of a famous People's Liberation Army leader, the late general Chen Yi, considered one of the fathers of modern China. Other notable associates include Zhu Yunlai, a son of former Premier Zhu Rongji, and Long Yongtu, China's chief negotiator in talks that led to the country's membership in the World Trade Organization.

Southern Weekend reported that more than 51 percent of Anbang is held by three private companies in which Chen Xiaolu has invested. Anbang's business registration says Chen is one of nine directors on the company's board of directors.

On January 29, Chen said he does not own Anbang shares but that he does serve as a company consultant. He said he and Wu have been business partners for 15 years, and that he has never gotten directly involved in the insurance company's operations.

Chen said acknowledged , however, that he had recommended in a conversation with Wu that Anbang should invest in U.S. dollar-denominated assets because, in his view, China's economy is slowing and the U.S. economy is recovering.

...Players in the insurance industry say Anbang has scored more regulatory approvals in recent years than its rivals. Special victories of late included permission to start a fund management firm, a pension insurance company and life insurance offices in Shanxi and Anhui provinces, and the cities of Shanghai and Shenzhen.

A CIRC official said Anbang has won fast-track approval partly due to Wu's initiative. He often visits the commission's offices, the official said, and follows up on CIRC action quickly.

But warning flags have been raised in the industry over whether Anbang's recent investments have exceeded regulatory limits. Media reports and business records indicate Anbang signed about 16 billion yuan worth of overseas deals last year.

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