Anbang Insurance Group was one of China’s largest and most aggressive financial institutions, known for its huge customer base, high leverage and fast-paced deal-making. But 10 days ago, as detailed in this article, Anbang was taken over by the Chinese government. In a classic too-big-to-fail moment, the China Insurance Regulatory Commission, a government financial regulator, took control of Anbang, installed new management and said they would manage Anbang for at least a year “to protect the legitimate rights and interests of consumers and safeguard public interests,” according to the commission’s press release. Anbang is not some small regional insurance company. It’s huge. Anbang has over $310 billion in assets, over 35 million customers and operations in Asia, Europe and North America. Anbang grew by selling customers a kind of life insurance called “universal life,” which is more like a structured high-yield note than true insurance. The problem with Anbang’s business model was that many of the universal life insurance policies had required payments in three–five years, while its investments were illiquid long-term investments. The only way Anbang could meet its obligations was with bank loans or sales of new policies in a kind of Ponzi scheme where new customers’ funds were used to pay off the old promises. As Anbang’s business became more highly leveraged and its asset-liability maturity mismatch grew, policyholders became nervous and started demanding their money back instead of extending the maturities on their policies. An insurance version of a run on the bank had begun. Chinese authorities moved in to bail out the policyholders and prevent an out-of-control financial panic. Anbang is a good example of what might be called a “managed meltdown.” It won’t be the last.