Anbang Withdraws Application for N.Y. Approval of Insurance Deal

Beijing-based Anbang Insurance Group Co.'s $1.57 billion pending acquisition of Fidelity & Guaranty Life has run up against regulators' demands for detailed financial information about its ownership structure, causing a glitch in the approval process, according to a regulatory filing and New York's top financial watchdog.

The U.S. life insurer said in a regulatory filing Tuesday morning that Anbang on May 27 had withdrawn its application with New York's Department of Financial Services for approval of the transaction after discussion with the regulators.

The insurer said it expects Anbang to refile the application "in the near future." The parties "seek to close the merger as expeditiously as possible" subject to the regulatory review and approval process.

In a separate statement, the New York Department of Financial Services said its regulators had "engaged in numerous conversations with Anbang in order to obtain information necessary to review and process Anbang's application. However, Anbang failed to provide to DFS the requested information. DFS subsequently informed Anbang that it would not be able to continue to process its application," and the Chinese company responded that it would withdraw the application.

The department said "Anbang will be able to resubmit its application should it provide the necessary information."

A person familiar with the matter said that issues arose with the New York regulators over the sufficiency of answers provided by Anbang about the company's ownership structure, relationships among its shareholders, and the source of its funding for the $1.57 billion deal.

Insurance conglomerate Anbang in recent years by has spent billions to acquire insurers and hotels throughout the world. In February 2015, it shelled out nearly $2 billion to buy New York's Waldorf Astoria, the highest price ever paid for a single U.S. hotel.

Fidelity & Guaranty said in regulatory filings earlier this year that the parties had obtained regulatory approvals for the deal from the Committee on Foreign Investment in the United States and the Vermont Department of Financial Regulation.

Under the U.S. system of state-based insurance regulation, Anbang has to obtain deal approval in states where Fidelity has operating units. Anbang has a pending application with regulators in Iowa, where operations also are based.

Iowa Insurance Commissioner Nick Gerhart said his department is monitoring Anbang's action in New York. "It is very unlikely that Iowa would even consider setting a hearing until Anbang and New York reach a satisfactory conclusion," Mr. Gerhart said in an email. "Upon that, and once our questions are answered, the record would be deemed complete and a public hearing set" on Anbang's application for deal approval in that state.

Anbang and Fidelity & Guaranty announced the deal in November stating the closing was expected by June 30. In early May, Fidelity & Guaranty said in regulatory filings that the deal was targeted for closing by Sept. 30.

Under the pact, stockholders of Fidelity & Guaranty Life will receive $26.80 per share. The U.S. insurer's shares were trading above $26 in March and April, but fell below $24 in May the regulatory-approval process dragged on. Fidelity & Guaranty's shares were down about 4.6% in early Tuesday trading, to $23.45.

Anbang has said it is owned by more than 30 corporate investors that don't participate in the daily operation of the company, as previously reported in The Wall Street Journal. Its ownership, as of its most recent public filings, is a blend of corporate shareholders, with multiple layers of holding companies.

The acquisition of Fidelity & Guaranty would make Anbang one of the largest insurers by market share in the U.S. of a savings product popular with risk-averse retirees. These "indexed annuities" pay interest based on the performance of a stock-market index.

In April, the U.S. Department of Labor issued new rules aimed at minimizing conflicts of interest when people use money in tax-qualified retirement-savings accounts to buy financial products. Under the rules, indexed annuities are subject to some of the stiffest new requirements, which take effect in April 2017.

Write to Leslie Scism at leslie.scism@wsj.com

(END) Dow Jones Newswires

May 31, 2016 12:55 ET (16:55 GMT)

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