The Chinese insurance regulator said on Monday that insurers must improve their information disclosure on issues including capital source when it comes to equity investment in public companies.

The regulator's statement came amid the escalating clash between listed developer China Vanke Group Co Ltd and its largest shareholder, Baoneng Group, a private insurance conglomerate.

The insurer and its affiliates have aggressively purchased Vanke's shares in the public market through what Vanke called a "hostile takeover" to become the developer's largest shareholder.

Zhou Yanli, vice-chairman of the China Insurance Regulatory Commission, said that regulatory priority is insurers' compliance with disclosure regulation while noting that equity investment in public companies is a normal practice by insurance firms as it meets their need for asset allocation.

Zhou was responding to a question on Chinese insurers' equity investment in public companies during a panel discussion on Monday at the World Economic Forum in Tianjin.

Chinese cash-rich insurers such as Anbang Insurance Group Co Ltd have been aggressively increasing their share holdings of public companies in the open market since last year. Their high-profile purchase of public companies including Vanke has sparked questions about their funding sources and the possible risks associated with their aggressive investment.

The regulator has stepped up its scrutiny by demanding that insurance firms conduct stricter stress tests on their assets and liabilities and capping their investment in equities, real estate and other financial assets to no more than 20 percent of their total assets.