The gross assets owned by China's insurance sector reached a record high of 1.0359 trillion yuan (126.3 billion US dollars) by the end of May, an official said Sunday.

The amount of disposal capital of the country's fledging insurance sector stood at 952.4 billion yuan (116.1 billion US dollars), said Wu Xiaoping, vice-chairman of the China Insurance Regulatory Commission (CIRC), the national insurance watchdog.

The figures indicate China's insurance industry has entered a new phase of development, which is characterized by fast development, rapid expansion of premium revenue and a lack of choices for the sector to invest its capital for profits.

Of the total premium revenue, Wu said, 52.5 percent has been put into banks, with bonds and funds accounting for 31 percent and6.86 percent respectively.

There were few long- and medium-term investment products available for the sector as China's young financial market has yetto be developed, he said.

But Wu was optimistic about the prospects of the insurance sector as the country's economy will maintain rapid and healthy growth for a long period and the financial market will be improved constantly.

Earlier this year, CIRC Chairman Wu Dingfu warned the industry against blind pursuit of premium increase when the government was seeking balanced and sustainable growth.

Noting the irrational pursuit of premium growth has led to such problems as inadequate reserves in insurance companies and increased business risk, he urged development of not only premiums but also efficiency and credit in the industry.

"The insurance business neither met the needs of society nor played the role it should though it grew rapidly in recent years,"he said.

Government assistance remains the major method for disaster relief in China, while in some developed countries insurance companies play the main role, he noted, adding that the industry still contributed to a small proportion of the country's economy.

Premiums in China's insurance industry totaled 338.04 billion yuan (40.87 billion US dollars) in 2003, a year-on-year rise of 27.1 percent, while the industry's total assets were worth 912.28 billion yuan (110.31 billion US dollars) by the end of the year.

Source: Xinhua