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August 29, 2009

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CIRC sets up body to curb fund misuse

CHINA'S insurance regulator has set up a committee whose task is to curb misuse of insurance capital as part of moves to strengthen insurers' corporate governance.

The committee's main aim is to secure insurance assets, help resolve serious conflicts among the management of the insurers and push them to improve internal control mechanism, the China Insurance Regulatory Commission said on its Website yesterday.

The committee will strictly monitor any illegal profit transfer within insurers through related transactions.

The tighter regulatory supervision came on the heels of Anhua Agricultural Insurance Co's punishment for loose corporate governance and abuse of insurance capital.

The CIRC fined Anhua Agricultural Insurance Co 800,000 yuan (US$117,100) for unauthorized equities deals and fake financial documents, it said on Thursday.

The insurer is also banned from making any investment except bank deposits for six months as it has suffered serious losses from its unauthorized buying of Shanghai-listed Jilin Ji En Nickel Industry Co.

The Jilin-based agricultural insurer didn't have regulatory approval to invest in stocks, the CIRC said.

Three senior officials of the firm were forced to quit.


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