March 15, 2016 / 7:43 PM / a year ago

China's Anbang wins U.S. security panel OK to buy Fidelity & Guaranty

3 Min Read

WASHINGTON (Reuters) - China's Anbang Insurance Group, which is looking to buy U.S. hotel operator Starwood HOT.N, has won approval from a U.S. national security panel to buy U.S. annuities and life insurer Fidelity & Guaranty Life (FGL.N), Fidelity said on Tuesday.

The U.S. insurer said in a filing with the U.S. Securities and Exchange Commission that the U.S. Committee on Foreign Investment in the United States, or CFIUS, had looked at the deal and found no unresolved national security concerns.

Anbang said in November that it would buy Fidelity & Guaranty for about $1.57 billion as Chinese insurers seek to expand into the United States. The deal would make Anbang one of the largest insurers by market share in fixed-indexed annuity products in the United States.

Winning approval from the CFIUS, a panel of 16 federal agencies, was harder than expected because U.S. officials were concerned about the vast amount of customer health and financial information that insurance companies have access to, according to a source close to the deal.

The source asked not to be identified because details of the CFIUS review are confidential.

Fidelity & Guaranty said in the filing it expected the deal to close in the second quarter.

On Monday, Anbang offered to buy Starwood for $12.8 billion, besting an offer made by Marriott International Inc (MAR.O).

That bid came just days after Anbang made a non-binding bid for Strategic Hotels & Resorts Inc from buyout firm Blackstone Group LP (BX.N) for $6.5 billion.

Chinese insurers are rushing to acquire high-yielding assets as they struggle to keep up with the policy liabilities of China's aging population. U.S. assets are also seen as a good hedge against any future weakness in the yuan.

Anbang's $2 billion acquisition of the iconic Waldorf Astoria Hotel in New York, which was completed last year, attracted CFIUS scrutiny but was approved.

The Starwood deal would also undergo a CFIUS review, primarily to ensure that none of its hotels are so close to sensitive U.S. facilities that they pose a threat to U.S. national security.

CFIUS, led by the Treasury Department, would likely scrutinize one property in particular: a W Hotel in downtown Washington that is across the street from the department and overlooks both Treasury and the White House, lawyers who specialize in dealing with CFIUS said.

CFIUS issues with individual hotels could be remedied through asset sales or other measures, the lawyers said.

Reporting by Diane Bartz and Greg Roumeliotis; Editing by Nick Zieminski and Richard Chang

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