NEW China Life Insurance Co, the insurer backed by Zurich Financial Services AG, may sell US$780 million of its initial public offering to so-called cornerstone investors, including DE Shaw & Co and Khazanah Nasional Bhd, two people with knowledge of the matter said.

Great Eastern Holdings Ltd agreed to invest US$380 million in the IPO, according to a statement from the Singapore-based insurer yesterday. DE Shaw and Khazanah, Malaysia's sovereign wealth fund, each plan to invest US$150 million in the IPO, while MBK Partners Ltd may buy another stake worth US$100 million, said the people, who asked not to be named because the information is private.

Cornerstone investors are guaranteed stock in an IPO in return for commitment to hold on to their stakes, typically for six months. Beijing-based New China Life may raise up to US$3 billion from the sale of shares in both Hong Kong and Shanghai.

The insurer is seeking to bolster its capital base through the stock sale, according to a term sheet sent to investors on November 21. The IPO comes as shares in major Chinese rivals have plunged on declining solvency ratios. China Life Insurance Co and Ping An Insurance (Group) Co, the country's two biggest insurers, have fallen 38 percent in Hong Kong this year.

Sources of "capital replenishment" for Chinese insurers are "limited," Chen Wenhui, deputy chairman of the China Insurance Regulatory Commission, said in Beijing on November 12. The country should allow insurers to sell subordinated bonds and explore the possibility of selling bonds in Hong Kong and overseas, he said.