By Jamil Anderlini in Beijing

New China Life Insurance, China’s fourth largest life assurer, is planning to raise up to $4bn by selling shares in Hong Kong and Shanghai in what is expected to be the first in a wave of initial public offerings by Chinese insurance companies.

New China Life, in which Zurich Financial Services holds a 15 per cent stake, is planning to sell 20 per cent of its total equity through a dual IPO in the two markets, according to people involved in the deal.

The company originally planned to finish the IPO before the end of October but, with global markets plummeting in reaction to escalating debt crises in Europe and the US, the listing may have to be delayed until things have settled down, these people said.

China’s largest insurers, such as Ping An Insurance and China Life Insurance, are already listed on overseas and domestic bourses, but New China Life’s IPO is expected to be followed by at least three more from the sector.

“New China Life’s IPO will probably be the start of a wave of IPOs by second-tier Chinese insurance companies,” according to Sam Radwan, managing partner and co-founder of Enhance International, a consultancy focusing on the Greater China insurance market.

Taikang Life Insurance, which counts Goldman Sachs among its shareholders, is planning to follow New China Life to the stock market, as are state-owned China Reinsurance and People’s Insurance Company (Group) of China.

The turmoil that has hit stock markets across the world in the last week means that New China Life would be lucky to raise $3-3.5bn if it went to market now, according to one person close to the deal.

“No decision will be made on the timing or size [of the IPO] until we have some clarity out of the current phase of volatility,” this person said.

The company has hired China International Capital Corporation, BNP Paribas, Goldman Sachs, HSBC, UBS, Deutsche Bank, JPMorgan and Bank of America Merrill Lynch to work on the IPO.

A successful listing by New China Life would represent an impressive feat for a company that has been mired in scandal for years.

In late 2006, the company’s former chairman, Guan Guoliang, was removed from his position and after two years of investigation he was charged in 2008 with suspected embezzlement and misappropriation of more than Rmb260m ($40m).

Mr Guan’s lawyer told the FT there has not yet been any verdict in his case, despite it going to trial nearly three years ago. He refused to reveal Mr Guan’s whereabouts. If found guilty, Mr Guan could face up to 20 years in prison.

In mid-2007, soon after he was removed from his position, an industry protection fund controlled by China’s insurance regulator took a nearly 40 per cent stake in the insurer and in 2009 the fund transferred this ownership to Central Huijin Investment, a subsidiary of China Investment Corp, the country’s main sovereign wealth fund.

For much of this time New China Life did not have a functioning board of directors and control of the company was effectively split between regulators, management and shareholders.

Chinese media reported that the company was also insolvent for some of that time and that it was placed on an insolvency blacklist by the regulator in 2009.

However, the booming Chinese insurance market still allowed New China Life to record a compound annual premium growth rate of 40 per cent between 2005 and 2010, with gross written premiums of Rmb93.6bn last year and a market share of around 9 per cent, according to the insurance regulator.