UNITE HERE urges Iowa Insurance Commissioner to investigate risks to annuitants of Anbang’s proposed acquisition of Fidelity & Guaranty Life

Union questions Chinese insurer’s investment activity, scrutiny from Chinese regulators, and unclear ownership and financial backing

DES MOINES, Iowa--(BUSINESS WIRE)-- In a letter sent today to the Insurance Commissioner of the State of Iowa, UNITE HERE urged regulators to fully consider the risks to beneficiaries and annuitants posed by the proposed purchase of Fidelity & Guaranty Life by China’s Anbang Insurance Group Co. before approving the transaction.

A copy of the letter is available at here.

If the acquisition is approved, Anbang would become one of the largest insurers in fixed indexed annuity products in the U.S., according to the company.

The letter outlines Anbang’s recent global acquisition spree of banking, real estate and insurance assets. The Wall Street Journal has reported that Anbang’s reliance on “high-yielding investment products” to fund its expansion has “sparked warnings from insurance-industry watchers who say it is adding risk to Anbang’s books.”

In its letter, UNITE HERE raises a number of concerns about the proposed transaction, including:

• Anbang has moved to invest heavily in U.S. hotels, an unstable and highly cyclical sector owing to the volatility of room rates and occupancy levels.
• Anbang’s efforts to acquire U.S. assets amidst a slowing Chinese economy could reportedly be blocked by Chinese regulators.
• Anbang’s ownership, financial backing, and internal decision-making structure remain murky to outside observers.

“Anbang’s investment behavior raises questions about how Fidelity & Guaranty Life beneficiaries and annuitants stand to benefit from the proposed acquisition,” said UNITE HERE research analyst Elliott Mallen.

Anbang has reportedly spent nearly $7 billion on foreign acquisitions since 2014, including the record $1.95 billion it spent to acquire New York’s Waldorf Astoria Hotel and its pending $6.5 billion purchase of Strategic Hotels & Resorts from Blackstone Group. The Chinese insurer recently and unexpectedly aborted its $14 billion takeover bid for Starwood Hotels & Resorts.

UNITE HERE is the North American hospitality union, with approximately 270,000 members in the hotel, gaming, food service and laundry industries. UNITE HERE monitors developments in private equity and pension security and provides periodic testimony on financial and regulatory matters of interest to its members.

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UNITE HERE

Elliott Mallen, 312-656-5807

Source: UNITE HERE