The move is aimed at protecting consumer interests as the company's unlawful practices may endanger Anbang's solvency, the China Insurance Regulatory Commission (CIRC) said on its website.
CIRC said it will take control of the company from February 23. It will maintain the company as a private enterprise even amid an equity restructuring, and Anbang's debts and obligations will not be impacted, it added.
Separately, the Shanghai prosecutors office said in a one-sentence statement on its website on Friday that Wu has been charged with fundraising fraud and embezzlement.
Best known for its 2015 purchase of New York's landmark Waldorf Astoria hotel, Anbang's troubles have been brewing for some time.
Last May, the CIRC suspended the Beijing-based insurer from issuing new products for three months, as it singled out one of the insurer's product designs that it said "deviates from the fundamentals of insurance."
A month later, Anbang said its then-chairman, Wu Xiaohui, was no longer able to fulfill his duties.
The latest development on Friday came amid Beijing's crackdown on high debt levels. The Chinese government has also been scrutinizing overseas deals by domestic companies as part of a massive effort to control potential systemic risks.
"Anbang has built up its position in the financial industry very aggressively over the last couple of years (and) used a lot of leverage," said Hao Hong, research head and chief strategist at China's Bank of Communications.
"The regulators want people to expand properly, taking proper risk and not over-extend leverage," Hong added.
Some companies have used substantial leverage while aggressively expanding, running the risk of "endangering entire financial system by adding on systemic risk," Hong told CNBC.
"At the same time, I would say because of the aggressiveness and because of their eagerness to expand business, some of them may be engaged in some wrongdoings, and now they are getting found out," he added.