June 5 (NBD) - Shenzhen Overseas Chinese Town Co., Ltd ("OCT", 000069.SH) seems to put a brake on its ongoing efforts in the financial sector.

A subsidiary of OCT was selling its 4.75 percent stake in Champion Property & Casualty Insurance Co., Ltd. (Champion Insurance) for 273.6 million yuan (42.6 million U.S. dollars) on the Chongqing Assets and Equity Exchange, reported 21 Century Business Herald.

Statistics shows that the net income of Champion Insurance turned negative in the first quarter of 2018, standing at -72.9814 million yuan (-11.4 million U.S. dollars).

It's noted that the company received a regulatory letter from the former China Insurance Regulatory Commission (now the China Banking Insurance Regulatory Commission) on February 11 this year, saying that random inspections found 45 insurance products defective. As a result, the regulator required Champion Insurance to stop using such products, banned the insurer from submit new insurance clauses and premiums (agricultural insurance excluded) in the next three months and demanded self-examination and rectification as well as related reports.

OCT's move to sell out stakes in Champion Insurance is surprising to many as the company has been eager to forge ahead in the insurance sector.

To date, OCT has invested in a string of securities and investment companies, including Yingda Securities, Guotai Junan Securities (2611.HK), Shenzhen OCT Capital Investment Management Company, and Shenzhen Walstar Investment, etc.

An industry insider commented that the tightening regulations in the insurance sector is to put an end to the "barbaric" growth pattern in the past. Champion Insurance hadn't achieved much in business expansion and reported a loss last year, which was the reason why OCT wanted out, added the industry insider. 

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