After the chairman of China's Anbang Insurance Group was removed from his role after reports of his arrest, the Beijing-based insurer is facing increased scrutiny from Chinese regulators looking to limit risky business practices in the nation’s insurance industry.
Authorities have asked lenders to cease business dealings with Anbang during this time of turmoil, and at least six large banks have stopped selling Anbang’s insurance policies, Bloomberg reports.
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Despite these controversies, a New York Anbang representative said business operations in the United States have not been affected, and the detainment of Chairman Wu Xiaohui has not slowed progress on the conversion of the Waldorf Astoria hotel in New York City.
"Anbang’s U.S. business is operating as normal; we continue to operate our properties and move forward with our development projects," the emailed statement read, according to Bloomberg.
Anbang has made a name for itself in the real estate world with a series of blockbuster deals in the U.S. and Europe. Blackstone sold Strategic Hotels & Resorts to Anbang for $6.5B last year in what was the largest U.S. real estate purchase from a Chinese buyer. The insurer also made a splash with its $2B trophy buy of the New York City Waldorf Astoria.
The company said its planned Waldorf Astoria condo conversions will proceed normally. Plans call for converting the hotel’s more than 1,200 rooms into 409 condos, four commercial units and 74 parking spaces.
The aggressive nature and speed of Anbang's spending spree, its opaque corporate structure, and the way in which it raises money and funds acquisitions have drawn the attention of Chinese authorities, Bloomberg reports.
The bank boycott effectively cuts off Anbang’s main revenue source, considering the company’s life insurance unit markets nearly 90% of its offerings through banks, ICBC International analyst Grace Zhou told Bloomberg. The sales from those policies has allowed Anbang to emerge as a major global real estate buyer, and according to Real Capital Analytics the company has spent $8B in just over two years on U.S. and European real estate.
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