China seizes control of Anbang Insurance as chairman prosecuted

A man walks past the office of Anbang Insurance Group in Beijing, China, February 23, 2018.

The Chinese government on Friday seized control of Anbang Insurance Group Co Ltd and said its chairman had been prosecuted, a dramatic move that highlights Beijing’s willingness to curtail big-spending conglomerates as it cracks down on financial risk.

Anbang had violated laws and regulations which “may seriously endanger the solvency of the company”, the China Insurance Regulatory Commission (CIRC) said in a statement announcing the seizure, without giving details.

The CIRC also said Anbang’s chairman and key shareholder, Wu Xiaohui, had been prosecuted for economic crimes. Wu was arrested in June as troubles mounted for one of China’s most aggressive buyers of overseas assets.

The Shanghai prosecutors office said in a statement Friday that Wu had recently been charged with fundraising fraud and abuse of his position, and that his case had been forwarded to the city’s intermediate court for prosecution.

During the government takeover of Anbang Group, which will last for one year starting on Friday, the company will be managed by a group of officials from the CIRC, the central bank and other key financial regulators and government bodies.

The group will seek to undertake an equity restructuring of the insurance giant, even as it keeps Anbang operating as usual, protecting the rights and interests of its consumers and stakeholders, the CIRC said.

The government takeover of Anbang, which claims 1.97 trillion yuan ($310.85 billion) in assets and ranks 139 on the Global Fortune 500 list, is a defining blow to the acquisitive conglomerate best known for acquiring New York’s landmark Waldorf Astoria hotel.

The unprecedented seizure of a major non-state company also underscores how far the ruling Communist Party will go in its growing campaign to lower financial risks, sending a signal to risk-taking private enterprises.