Anyone want to buy a historic hotel in midtown Manhattan? The Chinese government’s desire to curb foreign investments may have a big impact on the U.S. travel industry and especially hotel companies.
Chinese authorities have asked Anbang Insurance Group Co., the insurer whose chairman was detained in June, to sell its overseas assets, according to people familiar with the matter.
The government has also asked Anbang to bring the proceeds back to China after disposing of holdings abroad, said the people, who asked not to be identified because details are private. It is not clear yet how Anbang will respond, the people said.
“Anbang at present has no plans to sell its overseas assets,” the company said in a WeChat message. “Currently, Anbang’s various businesses and operations are all normal, and the company has ample cash and sufficient solvency capabilities.” A representative for China’s insurance regulator had no immediate comment when reached by phone.
Anbang was among the most prominent of Chinese insurers that went on a buying binge across the globe, fueled by soaring sales of investment-type insurance policies, with its 2014 acquisition of New York’s Waldorf Astoria hotel catapulting it into the public eye. Chairman Wu Xiaohui has been detained for questioning since mid-June, while the policies fueling its growth have been all but banned by regulators.
Several prolific Chinese buyers of foreign assets have come under regulatory scrutiny recently as leaders sought to limit capital outflows and clamp down on pricey, debt-funded deals. The other firms include Fosun International Ltd., HNA Group Co., Dalian Wanda Group Co., and the buyer of the AC Milan soccer club, whose acquisition loans have been under the scrutiny of the nation’s banking regulator.
At a twice-a-decade conference on financial regulation convened by President Xi Jinping this month, policy makers pledged to rein in corporate borrowing and said that preventing systemic risk was an “eternal theme.”
Anbang’s rise in recent years was fueled by sales of lucrative investment products that offered among the highest yields compared with peers. China’s insurance regulator this year started clamping down on what it termed “improper innovation” and tightened rules on high-yield, short-term investment policies. Anbang and other aggressive insurers such as Foresea Life got caught up in the crackdown.
One Anbang product, called Anbang Longevity Sure Win No. 1, boosted the firm’s life insurance premiums almost 40-fold in 2014 by offering yields as high as 5.8 percent. That helped provide fuel for the firm’s more than $10 billion of overseas acquisitions since 2014 and equally ambitious investing in the domestic stock market.
In October 2014, Anbang agreed to buy the landmark Waldorf Astoria in New York for $1.95 billion, a record for a single American hotel. Anbang bought real estate and financial services companies in Asia, Europe and North America, including the purchase of Strategic Hotels & Resorts as well as an office building in midtown Manhattan to house Anbang’s U.S. headquarters.
–With assistance from Zhang Dingmin
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Photo credit: Anbang Insurance Group, which owns the historic Waldorf Astoria hotel in New York City, may be forced to sell the hotel and it other foreign assets. Associated Press / Associated Press