Eurizon Financial Group, an Italian-based consortium, on Friday bought a 19.9 percent stake in Union Life Insurance for 800 million euro.

The deal makes Union Life the most expensive insurer for overseas investors, with each share valued at 6.5 yuan.

"Our clear corporate governance was the major attraction for Eurizon," said Dai Hao, chairman of Union Life. "But Chinese shareholders will continue to maintain the controlling stake in the long term."

Established in 2005, Union Life is the country's 10th-largest life insurer in terms of premium income. The Wuhan-based insurer was founded by six companies, with the Zhongfa Industrial Group holding the largest stake.

With the new cash injection, Union Life's registered capital is now more than 1.3 billion yuan. Eurizon becomes the second-largest shareholder, with two seats on the board.

"We are also going to issue subordinated bonds this year or in 2008, thus increasing our registered capital to 2.5 billion yuan and paving the way for a future listing," said Dai, adding that the company will probably embark on an initial public offering (IPO) in 2015.

Meanwhile, Union Life is actively seeking opportunities to buying a stake in the banking sector.

"To be a financial holding group is our target," Dai said. "And we would like to achieve it before 2010."

He said Eurizon's strong background in the banking and asset management sector was one of the major reasons for the stake sale.

Eurizon Financial Group, with 192 billion euro under management, is a subsidiary of Intesa Sanpaolo, the third-largest bank in Europe.

"The introduction of foreign investors can not only strengthen our management and solvency but also enhance our capabilities in product development and risk management," Dai said. "And we are going to set up six to eight branches this year, with premiums amounting to more than 3 billion yuan."

Before the eventual deal with Eurizon, Union Life was in talks with more than 20 foreign investors.

Union Life is hoping to find another partner to buy the remaining 5 percent that is on offer.

"We are still in the negotiation stage," Dai said. "It must be a financial institution, but it is undecided yet whether it will be a bank or insurer."

However, the price for the remaining 5 percent will be no lower than 6.5 yuan, Dai said.

With the insurance sector growing at an average 30 percent annually in the past two decades, an increasing number of foreign insurance companies have hopped on the bandwagon.