TOKYO (Reuters) -Four of Japan's top property and casualty insurers and other financial firms plan to sell around 500 billion yen ($3.1 billion) of shares in Honda Motor ( HMC ) , three people said, as the unwinding of cross-shareholding practices accelerates.

Tokio Marine Holdings Sompo Holdings and two units of MS&AD Insurance Group ( MSADF ) will together offload shares in the automaker, said the people, who declined to be identified because the information has not been made public.

Other financial institutions will also pare back their Honda ( HMC ) stakes, bringing the total sale to around 500 billion yen based on Honda's ( HMC ) current share price, the sources said.

Honda ( HMC ) is set to soon formally give the insurers the go-ahead to sell its shares, the sources said.

The automaker has already announced plans to buy back up to 300 billion yen of its shares during the current financial year, a move seen as helping absorb some of the impact from the sale.

Honda ( HMC ) declined to comment on the insurers' sale, saying only that the information was not something it itself had announced.

Spokespeople for Tokio Marine ( TKOMF ) and MS&AD declined to comment. Sompo ( NHOLF ) did not immediately respond to a request for comment.

The four firms, which include MS&AD units Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance, have previously said they would bring all cross shareholding arrangements to zero.

Honda ( HMC ) is one of the top five cross-shareholding companies for the insurers except for Aioi Nissay Dowa Insurance, according to securities filings as of March.

The sale of shares of a high-profile company, in which the insurers have notable stakes, is the latest sign that the unwinding of cross-shareholding is gaining pace in Japan.

Cross-shareholding, or companies holding shares in each other, was long seen as a way to cement business ties. However, governance experts and foreign investors have said it protects management from shareholders, leading to lax governance.

The four insurers, or their parents, held more than 300 billion yen of Honda ( HMC ) shares as of March, with Tokio Marine ( TKOMF ) at 161 billion yen, Sompo Japan at 81 billion, Mitsui Sumitomo at 73 billion and Aioi Nissay at 2.8 billion, securities filings showed.

In total, the four held some 9 trillion yen worth of cross shareholdings as of March, with Toyota Motor, Shin-etsu Chemical ( SHECF ) and Itochu among the top names, the filings showed.

In December, the four insurers were handed a business improvement order by Japan's Financial Services Agency after they were found to have fixed the prices of their corporate insurance fees. The regulator told them to reduce their cross-shareholdings.

Shares of Honda ( HMC ) turned negative in late trade on Tuesday following the report. Shares were down 1.7% at 1,727 yen, after earlier rising as high as 1,801 yen.

($1 = 161.5900 yen)