Only five Chinese insurers out of 170 surveyed were near regulatory red lines in the first quarter of the year, China's insurance regulator announced on Tuesday.

The data shines a brighter light on the country's insurance industry, which the government is considering shaking-up and tightening regulations for smaller, riskier insurers.

According to Chinese regulatory rules, insurance firms are required to maintain solvency ratios above 100 percent, or be subject to penalties on the scope of their business and financing activities.

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The comprehensive solvency ratio for the industry reached 238 percent at the end of the first quarter of 2017, compared with 247 percent at the end of 2016, said the China Insurance Regulatory Commission (CIRC) in a statement.

The core solvency margin for the industry reached 221 percent, far above the regulatory threshold of 50 percent, the statement said.

The industry's real capital amounted to 3.4 trillion yuan (493.47 billion US dollars) at the end of March, an increase of 189.9 billion yuan from the start of the year, CIRC said.

An assessment of 120 insurance firms from the first quarter last year showed that 10 life insurance firms and one property insurance firm were at risk, financial news magazine Caixin reported.

Challenges facing China's insurance industry were "generally controllable", but risk prevention was complicated and some risks could not be underestimated, the statement said.

China's insurance regulator has been moving aggressively since the start of the year, issuing new regulations and fines against companies to plug loopholes and tighten supervision.

CIRC has been particularly focused on the widespread issuance of higher yielding, short-term products by some insurers, and any potential systemic risk stemming from their use.

(Source: Reuters)