1st LD-Writethru: Foresea Life chief suspended from insurance business for irregular fund use

The top insurance regulator Friday barred Yao Zhenhua, chairman of Foresea Life Insurance, from the insurance industry for 10 years for irregular market operations.

China Insurance Regulatory Commission (CIRC) said in a statement that Foresea Life violated insurance regulations and provided false information for its capital increase.

Yao has been removed from the post, it said.

Foresea Life, a subsidiary of financial conglomerate Baoneng, was suspended from selling its questionable high-return insurance service in December, after speculative stake buyouts in listed companies by heavyweight insurers caused concern.

To contain possible financial risks, the CIRC sent investigation teams to insurance companies, including Foresea Life, to review their management, financial sheets, insurance product services and capital use.

The CIRC said Foresea Life had stated that its shareholders had used their own fund for capital replenishment in November 2015, but an investigation revealed that the statement did not match the actual capital source. The CIRC said Yao was directly responsible for the false information.

The punishment on Yao is in line with insurance law and his situation does not serve to mitigate or remit the punishment, according to the regulator.

CIRC chairman Xiang Junbo warned earlier this week that using insurance funds for short-term speculation and hostile takeovers in listed firms would be addressed without mercy.

The CIRC said it would help the insurer improve the way it is run. Endi