By Rick Carew and Ned Levin 

When a consortium led by Anbang Insurance Group Co. suddenly dropped its bid for Starwood Hotels & Resorts Worldwide Inc. last week, it vaguely cited "various market considerations" as its reason.

But bankers and analysts say the Chinese bidder always faced formidable hurdles in its quest for Starwood.

Providing proof of financing has been a consistent problem. In several meetings last year, Starwood and its bankers repeatedly questioned whether Anbang could come up with sufficient funds for a bid, denying Anbang access to private financial information typically offered to prospective bidders, according to Starwood filings.

Anbang seemed to have finally overcome those financing concerns in March, when it submitted a bid that threatened to break up a deal already agreed to by which Marriott International Inc. would acquire Starwood. Anbang's $13.2 billion offer was funded by state lender China Construction Bank Corp., people familiar with the situation said. After Marriott topped that bid, Anbang came back with $14 billion--but it but never made that nonbinding offer binding, leaving Marriott the victor.

The Anbang consortium dropped out because the deal had become too expensive, said Fred Hu, chairman of Chinese private-equity fund Primavera Capital Group, a partner along with U.S. private-equity firm J.C. Flowers & Co. in the bid. "There wasn't any issue with funding," he said.

If Starwood had chosen Anbang, the insurer would then have had to seek approval from China's insurance and foreign-exchange regulators. To allay the concerns of Starwood and its bankers over that, Anbang's offer included a stunning sweetener, said people familiar with the bid: Anbang and its partners would pay up even if Chinese regulators blocked the tie-up.

China Insurance Regulatory Commission rules limit Chinese insurance company's overseas investments to 15% of assets. Asked whether its acquisitions spree--which included the nearly $2 billion purchase last year of New York's Waldorf Astoria hotel--could push it over that line, Anbang told The Wall Street Journal that completed overseas investments comprise roughly 1.3% of its total assets, and pending overseas investments a further 1.5%. The company didn't respond to requests for a breakdown of assets or information about the origin of funds allocated for overseas acquisitions.

The Chinese insurer has many pockets of capital to draw from. Anbang Insurance Group raised nearly 50 billion yuan ($7.7 billion) from 31 new corporate investors in 2014. It also has an array of subsidiaries, from insurance arms such as Anbang Life Insurance and Anbang Property & Casualty to a major regional bank in Sichuan province. Anbang told The Wall Street Journal it holds $100 billion in cash and equivalents.

An Anbang deal for Starwood would also have needed approval from the Committee on Foreign Investment in the U.S., or CFIUS, which reviews foreign purchases of U.S. assets for national-security concerns. Some lawyers and analysts see CFIUS approval as less of a challenge for Anbang because the committee had approved two prior Anbang acquisitions in the U.S.--of Fidelity & Guaranty Life and of the Waldorf Astoria.

The bidding process subjected unlisted Anbang to fresh scrutiny over its political connections in China, as well as its opaque ownership, a web of 39 corporate shareholders ranging from car dealerships to mining companies. Local media have said some of those firms may have ties to the family of former Chinese leader Deng Xiaoping, whose granddaughter married Anbang Chairman Wu Xiaohui.

The company didn't respond to questions about who ultimately owns Anbang and whether its shareholders are related to any of its directors. It previously told The Wall Street Journal that it is owned by over 30 corporate investors who don't participate in its daily operations.

Write to Rick Carew at rick.carew@wsj.com and Ned Levin at ned.levin@wsj.com