The largest shareholder of the China Ping An Insurance (Group) Co plans to sell part of its stake in the nation's second-largest insurer to meet regulatory requirements.

　　Shenzhen Investment Management Co, the investment division of the Shenzhen municipal government, will sell a 3.6-percent stake in Ping An, or 88 million shares, for 522 million yuan (US.9 million), Bloomberg News reported.

　　"Ping An is a fast-growing firm with steady returns and we believe the price is fair," said Yu Shui, an official with the financial department of Shenzhen Investment.

　　"We're selling simply because we aren't allowed to own more than 10 percent in an insurance firm," Yu added.

　　The Shenzhen-based insurer reported profits of 1.7 billion yuan in 2001 from its 250,000 sales agents and 68 branches.

　　As China quickens corporate reform in state-backed financial institutions, a single shareholding firm is not allowed to hold more than 10 percent stake in banks and insurance firms.

　　Buyers for the stake transferred from Shenzhen Investment have not yet been decided, but only state-owned companies are qualified to purchase it.

　　Shenzhen Investment, which is also in talks to sell its holdings in Shenzhen Development Bank to US-based fund Newbridge Capital Ltd, is Ping An's biggest shareholder, with a 16.06-percent share.

　　After the sale, Shenzhen Investment will remain the largest shareholder of Ping An. The company said it will continue to sell shares to meet regulatory requirement.

　　The government investment body is not the first major shareholder to sell stakes in Ping An.

　　China Merchants Shekou Industrial Holdings Co, once the second-largest share-holder of Ping An, sold all of its 14-percent stake in the insurance company last year.

　　Ping An, which controls about a fifth of China's insurance market, sold 10 percent of itself to HSBC Holdings Plc for US million last year, raising overseas shareholdings - including stakes held by Goldman SachssgroupsInc and Morgan Stanley - close to 25 percent.

　　Ping An will offer initial public shares in Hong Kong to raise as much as US.5 billion within the year.

　　Founded in 1988 by Merchants Shekou and the Industrial and Commercial Bank of China, it has attracted more than 50 investors.