CHINA'S insurance regulator will buy 22.53 percent of New China Life Insurance Co for a reported 1.6 billion yuan (US$209 million).

The China Insurance Regulatory Commission will buy the stake from three existing shareholders of New China Life, the regulator said yesterday on its Website, without giving more details.

The regulator will use money from China's eight billion yuan insurance protection fund to buy 270 million shares at 5.99 yuan each in the country's fourth-biggest insurer, Caijing magazine reported earlier, citing unnamed sources.

It will be the first time the regulator is using money from the fund to buy a stake in an insurer as the fund was set up to help policy holders when an insurer goes bankrupt or faces huge problems.

The move may be linked to Guan Guoliang, former chairman of the Beijing-based insurer, who the regulator is investigating for alleged misuse of almost 13 billion yuan, the Beijing-based magazine said.

Guan, who still owed 2.7 billion yuan to the insurer, has said "he will be back" to the company, the report said.

The three shareholders that CIRC will buy the shares from have a close relationship with Guan.

New China Life, set up in 1996, has three foreign investors - Zurich Financial owns 18.9 percent, Meiji Life Insurance Co 4.5 percent and International Financial Corp 1.5 percent. The balance is held by 12 domestic companies.