NEW China Life Insurance, China's third-largest life insurer, yesterday gained regulatory approval for an initial public offering in Shanghai, a step forward in its plan for dual listing in Shanghai and Hong Kong.

The China Securities Regulatory Commission yesterday approved the sale of 158.5 million shares on the Shanghai Stock Exchange. The insurer did not give a fundraising target but analysts said they expected it to raise up to 5 billion yuan (US$757 million) in Shanghai, lower than previous market expectations, Xinhua news agency said.

Chen Jian, an analyst with Caitong Securities, said the insurer has already reduced its IPO size after considering market conditions, and the current fundraising is not likely to have huge impact on the stock market.

The insurer, controlled by Central Huijin, a unit of China's sovereign wealth fund, and 15 percent owned by Swiss insurer Zurich Financial, will now seek approval from the Hong Kong regulator.

New China Life said it plans to sell 358.42 million shares on the Hong Kong stock exchange, with an option to expand that by another 15 percent, the company said in its IPO application. The funds raised through the dual listing will be used to replenish capital, as the firm has failed to meet the regulator's capital adequacy requirement for three years, the insurer said.

Its solvency ratio fell to 86.6 percent at the end of September, short of the regulatory standard of 100 percent. The company attributed the shortage of funds to a volatile financial market and decreasing insurance business.

The insurer may start the dual stock sales in December, according to Bloomberg News.