Chinese regulator to bring strategic investors into Dajia Insurance Group, the firm that replaced fallen Anbang Insurance

China’s banking and insurance watchdog is in talks to introduce strategic investors into Dajia Insurance Group, the newly created firm that absorbed healthy assets from the troubled conglomerate Anbang Insurance Group.

The regulator “has basically secured social investors” to establish an appropriate shareholding structure for Dajia, just as it ended a two-year takeover of Anbang on Saturday, the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement.

In addition, all of Anbang’s short-term investment products, totalling 1.5 trillion yuan (US$213 billion), were paid back on time in January, it said.

Roping in private investors for Dajia would mark another significant step for Chinese regulators in resolving financial risks associated with the downfall of Anbang in an orderly and market-driven manner, after establishing the new firm in July on the basis of Anbang’s life insurance, pension and asset management businesses.

Anbang’s former chairman Wu Xiaohui, a financial magnate, was sentenced to 18 years in prison for financial fraud and embezzlement involving over 752 billion yuan (US$11 billion) in May 2018.

Government sets up Dajia Insurance to take over Anbang’s assets

Prosecutors also found him to have fabricated financial statements and illegally absorbed capital from the public by selling insurance plans that were in fact investment products.

The dramatic fall of Wu and Anbang is one of the most iconic cases involving China’s clampdown on fast-growing debts accrued by aggressive private firms in recent years.

The company, which at one point had 2 trillion yuan in assets, took on a massive pile of debt after it went on an aggressive shopping spree for overseas assets between 2014 and 2016, leading regulators to believe it could destabilise the financial system. In its highest-profile purchase, Anbang bought the famous Waldorf Astoria hotel in New York for a record US$1.95 billion.

Since authorities took over Anbang two years ago, they have sold off its shares in many companies including regional lender Chengdu Rural Bank in order to maintain enough liquidity.