Mon | Aug 21, 2017

Report: Chinese insurance tycoon detained

Published:Wednesday | June 14, 2017 | 6:00 AM

The founder of the Chinese insurance company that bought New York City's Waldorf Astoria Hotel during a global acquisition spree has been detained by regulators, a business news magazine said Tuesday, following reports of possible financial misconduct.

Anbang Insurance Group Limited Chairman Wu Xiaohui was "taken away by authorities" on Friday, said Caijing, citing unidentified sources. It said officials of the insurance regulator announced the action the following day at a company meeting, but gave no details.

Spokespeople for Anbang did not respond to phone calls or e-mails Tuesday evening.

Anbang, founded by Wu in 2004, expanded rapidly to become one of the biggest companies in a staid Chinese insurance industry dominated by state-owned companies.

The industry has faced heightened scrutiny since late last year following complaints of reckless speculation by insurers in stocks and real estate. The chairman of the Chinese insurance regulator is under investigation by the national anticorruption agency.

Anbang made a multibillion-dollar series of acquisitions in the United States, Europe and other foreign markets, including buying the Waldorf in 2016 for US$2 billion. That prompted questions about how the company was paying for its purchases.

The company discussed possibly investing in a Manhattan skyscraper owned by the family of Jared Kushner, US President Donald Trump's son-in-law and adviser. Those talks ended in March without a deal.

Anbang, which is privately held, said the money for its global acquisitions was raised from shareholders.

The company denied accusations in April by another business news magazine, Caixin, that it improperly used payments by policyholders to increase its capital.

The company also denied rumours that spread on Chinese social media in April that Wu had been detained.

Anbang has more than 30,000 employees serving 35 million clients and has interests in life insurance, banking, asset management, leasing and brokerage services. In May, Anbang was ordered to stop selling two financial products that regulators said violated industry rules.

Anbang said it raised 50 billion yuan (US$8 billion) from investors in 2014 to pay for its buying spree. That increased its registered capital fivefold to 62 billion yuan (US$9.5 billion), the biggest among Chinese insurers.

Caixin's April report said at least 30 billion yuan (US$4.3 billion) of that money really was payments from policyholders. The magazine said it was channelled back into the company through a complex ownership structure.