Abl, Tongyang Life Suffer Owner Risks

The future of Tongyang and ABL, the insurance duo owned by Chinese Anbang Insurance Group, remains unclear as the Chinese government has decided to manage the insurance group for one more year.

The China Insurance Regulatory Commission took control of the Anbang Group in February 2018 as part of efforts to reduce financial risks, after group Chairman Wu Xiaohui was arrested for alleged fundraising fraud and embezzlement. A Chinese court later sentenced him to 18 years in prison.

Following the decision, the commission is scheduled to control the insurance group until Feb. 22, 2020.

Concerns are now growing over Tongyang and ABL's future businesses as the Chinese government's decision is likely to put the two insurers up in the air without a financial injection amid the industry downturn.

"Under the Chinese government's guardianship, their marketing and PR activities are constrained as the Chinese government controls budgets and expenses in a very conservative manner," an industry source close to the companies said on condition of anonymity.

Beijing has actively looked for a possible buyer to acquire Anbang's overseas operations, but is clearly experiencing difficulties since they are currently valued much lower than their purchase prices.

ABL CEO Sun Lei

According to industry sources, Anbang's total assets are currently estimated at 53.4 trillion won ($47.27 billion). Of them, more than 20 trillion won are believed to be overseas.

"The Chinese government plans to liquidate the insurance group's overseas investments, but it won't be easy because the group has spent too much money to expand itself without considering risks," said an industry insider who asked not to be named.

I understand the government is also reviewing its options to sell off its insurance operations in Korea.

Tongyang and ABL, however, said the Chinese government's guardianship isn't likely to cause problems...