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Anbang woes deepen as banks said told to halt business dealings
[SHANGHAI] Anbang Insurance Group Co, whose chairman has been detained amid a police investigation, faces an added challenge as authorities asked banks to suspend business dealings with the insurer, according to a person with knowledge of the matter.
That directive came as investigators began a wide-ranging probe into Anbang's operations and detained Chairman Wu Xiaohui, said the person, who asked not to be named discussing private information. 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.
Mr Wu rose to international fame with a spate of high-profile overseas acquisitions in past years that also raised questions about the sustainability of its funding. Chinese regulators last year began stepping up scrutiny of insurers who rely on sales of short-term policies to fund purchases of illiquid assets like real estate.
Anbang's life-insurance unit sold 115 billion yuan (S$23.3 billion) of policies through banks last year, double the amount in 2015 and accounting for 88 per cent of total premiums, according to its annual report. At least two of the six banks had stopped selling Anbang policies before Mr Wu's detention, the people said.
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.
Premium income at Anbang's life unit tumbled 88 per cent in April, based on data posted on the China Insurance Regulatory Commission website on Thursday. Income from the Hexie health-insurance product plunged 94 per cent, 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. 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 separately on Thursday.