Such specialized management companies could better control investment risks and increase profits, he said Wednesday during the China Insurance Development Forum 2003.

Domestic insurance companies all set up internal investment departments, which would not be suitable when insurance assets expanded and investment varieties increased, Zhao said.

Insurance companies, as part of the financial sector, should be based on financial investments. Insurance companies could currently invest in savings banks, bonds and funds, and probably in stocks and management funds in the future, he said.

Zhao said insurance asset management had become an important base for the healthy development of the insurance industry. The newly revised Insurance Law provided legal protection for the establishment of specialized insurance asset management institutions.

Some 80 percent of the world's top 34 insurance share-holding companies had specialized insurance asset management companies, he said.

By the end of 2002, the overall assets of China's insurance industry reached 649.41 billion yuan (US$81 billion), with usable assets reaching 579.93 billion yuan (US$72 billion).

(Xinhua News Agency February 20, 2003)