(Yicai) Sept. 18 -- China’s top financial regulator has approved the takeover of Evergrande Life Insurance, a unit of debt-ridden real estate giant China Evergrande Group, by a new state-owned insurer specifically set up for the task.

Haigang Life Insurance will assume all of Evergrande Life’s assets and liabilities, the National Administration of Financial Regulation said on its website on Sept. 15. Haigang Life will also fulfill Evergrande Life’s insurance contracts and protect its clients’ interests and rights, it added.

Haigang Life was set up by the China Insurance Security Fund, Taiping Life Insurance, and state-owned firms in Guangdong province, Shenzhen, and Chongqing with the sole aim of taking over Evergrande Life. With a registered capital of CNY15 billion (USD2.1 billion), Haigang Life received a business permit in April and was approved to open its doors in June.

Shenzhen-based state-backed Penglian Investment bought 51 percent of Haigang Life for CNY7.7 billion (USD1.1 billion), while two other state-owned enterprises, located in Guangdong and Chongqing, invested CNY1.2 billion for 8 percent each.

The China Insurance Security Fund took a 25 percent stake for CNY3.8 billion. The fund is designed to rescue policy holders and policy transferees as well as take part in risk disposal and the liquidation of insurance companies.

Evergrande has owned half of Evergrande Life since 2015. The insurer’s revenue grew rapidly in the following three years, reaching CNY32.4 billion in 2018, with assets of CNY120.2 billion (USD16.5 billion). But earnings weakened thereafter, and net profit plunged 80 percent to CNY334 million (USD45.9 million) in 2020.

Evergrande Life has not provided any financial updates since a debt crisis broke out at its parent company in 2021. According to the head of a Shenzhen regulator, Evergrande Life is highly insolvent but regulators are closely supervising it and the firm’s operations are now stable after rick management was carried out.

Editors: Zhang Yushuo, Martin Kadiev