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​To Sort Anbang’s Assets, Chinese Authorities Create Dajia

The Wall Street Journal
2019-07-02 11:09

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Chinese authorities have formed a new company to take over assets of Anbang Insurance Group Co., laying the groundwork for a new phase of restructuring for the troubled company.

Dajia Insurance Group, which registered in Beijing earlier this week under Anbang’s chairman, will take over the firm’s assets, according to a person familiar with the matter and the new company’s registration.

The government took over Anbang early last year and then placed it under the control of the China Insurance Security Fund, a state-owned backstop for insurance companies. The creation of a new entity signals a further push by authorities to sort out the company’s assets, some of which are being sold off to raise cash.

The China Insurance Security Fund will own 98% of Dajia, with state-owned China Petrochemical Corp. and SAIC Motor Corp. 600104 1.88% as minority shareholders, according to the National Enterprise Credit Information Publicity System. The ownership structure is the same as that of Anbang.

“There should be some stripping of assets in this,” said Shujin Chen, a financial analyst at Huatai Securities Co. “In a normal restructuring, the buyer doesn’t receive everything.”

Anbang’s sale of assets began last fall with a securities unit being sold to state-backed companies.

Investors are bidding for the insurer’s luxury hotels worth billions of dollars, The Wall Street Journal reported earlier this month. The portfolio includes high-end properties overlooking Manhattan’s Central Park but not the landmark Waldorf Astoria.

Anbang made global headlines by selling investment products to Chinese consumers and plowing money into property and financial companies. The government put an end to that last year by taking over the company and sentencing its then-chairman, Wu Xiaohui, to prison for financial crimes. Regulators have described Anbang’s blazing expansion as a systemic risk to the country’s financial system.

Authorities have disclosed little about the company’s restructuring. The China Banking and Insurance Commission has previously said the insurance fund would hold Anbang until February 2020.

The regulator didn’t respond to a request for comment.

The insurance security fund pumped 60.8 billion yuan ($9.7 billion) into Anbang in 2018 to help stabilize its operations and keep it solvent while it tried to find new private investors.

The new insurance entity has 20.4 billion yuan in initial capital, according to the registrar.

He Xiaofeng, Dajia’s legal representative, is an official with the Chinese insurance and banking regulator.

Source: The Wall Street Journal
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