Regulator in China Takes Aim at Anbang Insurance Group

Chinese regulators began stepping up their scrutiny of banks several years ago, and they have been discouraging some aggressive lending and money-raising programs. Partly in response to that, real estate developers and others who needed to borrow large amounts of money began turning to insurers, which rapidly expanded their financial activities and raised the money to do so by selling a wide array of often speculative investment products.

The State Council, China’s cabinet, announced separately on Friday the dismissal of the chairman of the insurance regulatory commission, who has been the subject of a corruption investigation. The government has not linked that investigation to Anbang, however.

This week, the insurance regulator said it was barring Anbang from selling two of its investment products.

One, the Anbang Longevity No. 5 Annuity, had been presented to regulators as a long-term investment. But the commission said that it was effectively a two-year investment that should have been subject to more stringent regulations on short- and medium-term investments.

The other banned investment product, Anbang Endowment Insurance, was put on the market without an actuary’s signature, the commission said.

In an uncommonly sweeping warning to the insurer, the regulator concluded its announcement by telling Anbang that it should pay “high attention” to its full range of investment products and “fix the work on product development and management in strict accordance with supervision policies and requirements.”

The investment-product bans and the broad admonition were part of a direct order to the company that was dated on Thursday and posted on the commission’s website on Friday.

Anbang said that it had no immediate comment on the commission’s order. Chinese regulatory decisions typically take…

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