China's insurance regulator on Friday announced a decision to take over Anbang Insurance Group for a year starting the same day, in light of the company's former chief being prosecuted for economic crimes.
The move is taken to maintain normal operations at the company and protect consumers' rights, according to a statement of the China Insurance Regulatory Commission (CIRC).
"Illegal business practices by Anbang Insurance Group may seriously threaten the solvency of the company," said the CIRC in the statement.
Public prosecutors recently filed a lawsuit against Wu Xiaohui, former chairman of the board and general manager of Anbang, in the Shanghai Municipal No. 1 Intermediate People's Court, accusing him of fundraising fraud and embezzlement by taking advantage of his post, according to sources from the No. 1 Branch of the Shanghai Municipal People's Procuratorate.
The CIRC said it has demanded Anbang Insurance Group to "adjust" Wu's positions as the company's chairman and general manager.
A special group has been established, with participation of personnel representing departments including the CIRC, the People's Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange, to be responsible for the takeover of the company, the statement said.
The rights and liabilities of the company will not be changed after the takeover, it added.
"At present, business operations of the group are stable and interests of consumers and stakeholders have been protected," said the statement.
During the takeover, Anbang Group will remain as a private insurer, while social capital will be introduced to complete the company's shareholder restructuring, according to the statement. (Updated)