The company did not say when it would sell shares or with which investors it was having discussions.

Sources had said the stock offering could raise as much as US$2.6 billion in Hong Kong and Shanghai.

Renaissance Re was founded by buyout group Warburg Pincus and affiliates of General Electric in 1993. It is based in Bermuda and listed on the New York Stock Exchange, where its shares have risen 3.5 per cent this year, underperforming the 8 per cent rise in the S&P 500.

Renaissance said gross premiums in its reinsurer unit rose 15 per cent to US$141.5 million in the third quarter. The company also operates a traditional insurance unit. Spokesmen at China Re and Renaissance could not be reached for comment.

Swiss Re had been the preferred investor until China Re began attracting interest from elsewhere, sources said.

China Re 'is playing them off each other', said one source.

Still, China Re considers European firms such as Swiss Re and Munich Re, the world's two biggest reinsurers, as the best choice because of their dominance in the market, sources said.

'They are looking to bring in expertise, which is what they really need, and when they do the IPO, that will make it easier to sell to the investing public,' said an insurance analyst who asked not to be identified.

Beijing broke China Re's dominance in the local reinsurance market in December 2005 when it scrapped rules requiring insurers to give part of their business to the firm.

The central government injected US$4 billion into China Re through Central Huijin Investment last year to boost its capital ratio. China Re was valued at US$6 billion at the time.

China Re's revenue jumped 42 per cent in the first nine months to 29 billion yuan.

Reinsurance firms indemnify or pay damages to insurance companies should claims be filed, in what amounts to an insurance cover for the insurance companies themselves.

By offloading the risk of paying out claims to reinsurers, insurance companies can sell more premiums.

The mainland reinsurance market is expected to reach 100 billion yuan by 2010, when its total premium revenue surpasses one trillion yuan, according to the China Insurance Regulatory Commission. Premium growth in the country rose 24 per cent in the first nine months of this year.

The mainland's insurance industry has the fastest growth in Asia. Property and casualty premiums have risen at a compound annual growth rate of 15 per cent to 13.9 trillion yuan over the past five years, a Bear Stearns report said this year.

The US investment bank expects double-digit premium growth until 2020.