A Chinese media report says IAG's plans to invest in a local insurer have been suspended due to the Australian insurer's financial concerns.

The report in China Knowledge names IAG's potential investment targets as China Continent Property and Casualty Insurance, and China United Property Insurance.

China United Property Insurance Company is China's fourth largest non-life insurer, collecting 9.495 billion yuan ($1.37 billion) in premiums so far this year.

The report comes just months after IAG's fraught investment in China Pacific Property Insurance (CPIC) collapsed.

IAG announced in February last year it had signed a memorandum of understanding with CPIC to purchase a 24.5% interest in the company, which analysts had valued at more than $350 million.

But the deal fell over in June when IAG announced in an ASX release it had suspended its investment in CPIC and "barring any substantial changes in CPIC's short term strategy" was "unlikely to proceed".

India is also proving a difficult proposition for IAG after it was beaten by Munich Re's Ergo unit to a 26% stake in insurer Housing Development Finance Corporation last month.