China’s regulators break down Xiao Jianhua’s financial empire, seizing Tomorrow Group’s insurers, trust firms and brokers

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The government said it has taken control of Huaxia Life Insurance, Tianan Life Insurance, Tianan Property Insurance and Yi’an Property Insurance, according to a statement by the China Banking and Regulatory Commission (CBIRC)

New Times Trust, and New China Trust were also taken over, effective immediately

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Xiao Jianhua, founder of the Tomorrow Group of companies, is awaiting trial in an unknown location on charges of bribery and stock price manipulation, while key parts of his sprawling empire are been taken over, or sold. Illustration: Henry Wong

Enoch Yiu

Published: 5:45pm, 17 Jul 2020Updated: 6:10pm, 18 Jul 2020

China’s financial regulators seized control of several insurers, trust firms and stock brokers linked to one of the country’s most powerful oligarchs, in a devastating blow against corporate malfeasance and freewheeling capitalism while the stock market is in the midst of a runaway rally.

Huaxia Life Insurance, Tian’an Property Insurance, Tian’an Life, Yi’an Property Insurance, New Times Trust and New China Trust were placed under state ward to “protect the rights of policy holders, customers and serve the public’s interest,” the China Banking and Regulatory Commission (CBIRC) said in a statement. Separately, New Times Securities, Guosheng Securities and Guosheng Futures were placed under the government’s management for a year, the China Securities Regulatory Commission (CSRC) said.

The coordinated seizures extend the break-up of Xiao Jianhua’s Tomorrow Group, a sprawling empire with stakes in hundreds of publicly listed companies held through a labyrinthian network of entities, that began three years ago. The crackdown of 2017 also placed half a dozen of China’s biggest global asset buyers under regulatory scrutiny to prevent their debt-fuelled acquisitions from harming the nation’s financial system.

“The seizures of the insurers and trust firms signify a very big clean-up operation by the regulators,” said Gordon Tsui, chairman of the Hong Kong Securities Association. “It shows the country’s commitment to clean up the market and to enhance the protection of policyholders and investors. Some of the insurance companies are too big to collapse, and taking them over with a restructuring plan is the only way forward to maintain the stability of the market.”

On the eve of the Lunar New Year three years ago, Xiao was persuaded to leave his luxury hideout at the Four Seasons residence in Hong Kong to return to mainland China for investigations by financial regulators. Xiao, who has not been seen since in public, is awaiting trial at an unknown location on charges of bribery and manipulating stock prices, while key pieces of his empire had been taken over one by one, shut down or sold.