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Chinese insurer gets go-ahead to buy landmark US Waldorf Astoria hotel

Chinese insurer gets go-ahead to buy landmark US Waldorf Astoria hotel

Rapidly growing Anbang gets American approval to add Waldorf Astoria in New York to portfolio

Anbang Insurance, China’s biggest insurance company by registered capital, said yesterday that US regulators had given the go-ahead for its US$1.95 billion purchase of New York’s landmark Waldorf Astoria hotel.

The deal is yet another high-profile acquisition by the Beijing-based insurer, which until last year had largely laid low.

It comes amid intense mainland media attention over Anbang’s registered capital, which under chairman Wu Xiaohui , multiplied fivefold from 12 billion yuan (HK$15 billion) to 61.9 billion yuan last year – even surpassing that of state giants PICC and China Life.

In just the past week, Southern Weekly and Caixin, two leading mainland news outlets known for their investigative reporting, published lengthy conflicting reports about the insurer and its ties to powerful families – ending with a rare public apology yesterday by Southern Weekly to Anbang for an unspecified “factual error”.

Underscoring its expansion plans, Wu and 10 Anbang executives appeared at Harvard University on Saturday in a recruitment drive to fill more than 30 positions globally. Live photos of the event were posted on social media and picked up by various Chinese news outlets.

Anbang said yesterday on its website that the US Committee on Foreign Investment had approved its purchase of the iconic New York hotel from Hilton Worldwide. The deal marks one of the highest prices per room ever paid for a US hotel.

The US committee had said in October that it was reviewing the sale to Anbang, citing among its reasons possible security concerns.

Founded in 2004 as a property and casualty insurer, Anbang was little known in the insurance industry until last year, when it went on a buying spree.

Anbang agreed in December to pay €219 million (HK$1.92 billion) for Delta Lloyd Bank Belgium, the banking unit of Dutch insurer Delta Lloyd NV. It reached an agreement in October with US firm JC Flowers & Company to acquire its stake in Belgium-based insurer Fidea, just one week after the announcement of the Waldorf Astoria deal. And last month Anbang snapped up shares in China Minsheng Banking Corp to make it the largest shareholder in China’s biggest listed non-state-owned lender.

Phillip Securities analyst Chen Xingyu said Anbang was “small in terms of its [insurance] premium business”.

“It’s not even one of the top five in the industry,” Chen said.

Anbang’s life insurance premiums totaled 52.9 billion yuan last year, putting it 35th among its peers. Its property and casualty premiums amounted to 5.1 billion yuan, or 14th in the country, according to China Insurance Regulatory Commission data.

The company has expanded its investor base in an effort to increase its capital, last year raising the number of major shareholders from eight to 39 companies with interests ranging from investment to property.

In two separate investigative reports in the past week, Southern Weekly and Caixin magazine detailed the complex shareholding structures of the investors, with some having registered offices on the same premises, hiring the same public accountants and having the same directors or legal representatives.

Several calls to Anbang’s headquarters in Beijing yesterday went unanswered.

An insurance analyst, who declined to be named, said: “As an insurance company whose premium business is so much smaller than major players, I don’t think Anbang needs such a large registered capital base.”

But the capital strength would allow the company to be more aggressive, she said.

Caixin said Wu, Anbang’s chairman, was described by others as diligent, aggressive and a workaholic.

Born in 1966, he started his career in Zhejiang province in the car leasing business. He later expanded his interests to construction in Shanghai and went into business with Chen Xiaolu, the son of Marshal Chen Yi, the report said.

The report also said that Wu had been married three times – his second wife was a daughter of a deputy governor of Zhejiang, and his third wife was a granddaughter of late leader Deng Xiaoping . Caixin said Wu’s third marriage also ended, but did not say when.

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