BEIJING - Chinese insurers are expected to report a 25.1 percent increase in profits to 57.6 billion yuan ($8.69 billion) this year, Wu Dingfu, China Insurance Regulatory Commission (CIRC) chairman, said on Tuesday.

According to the CIRC, the country's premium income in the first 11 months rose 31.6 percent year-on-year to 1.34 trillion yuan, of which life insurance contributed 991.3 billion yuan and non-life insurance accounted for 352.8 billion yuan. The industry's assets totaled 4.9 trillion yuan.

"Strengthening supervision of insurers' solvency capacities will be one of our major focuses next year," Wu told the national insurance work conference.

To maintain a sound solvency capacity while expanding business, 46 insurers invested a total of 33.2 billion yuan to boost their registered capital, and eight insurers launched subordinated bonds valued at 22.6 billion yuan this year.

Though insurers have been allowed to invest in real estate and private equity, Wu said the industry regulator will closely monitor these two fields as higher risks will be involved in such investments.

"Some insurers have been seeking investment opportunities in the property market, but they are very cautious about it. We expect more property investment from insurers next year," said John Wong, director of investment services at Collier International.

Betting on the insurance industry's rosy prospects, the regulator has received more than 100 applications to launch new insurers, with many applicants being large State-owned enterprises.

"Foreign insurers are also quite active in entering the market," Wu said.

During the 11th Five-Year Plan (2006-2010), the annual growth rate of China's insurance premium income stood at 24.2 percent, and the investment return exceeded 6 percent despite big fluctuations in the capital market.

CIRC statistics show that the country's premium income only accounted for 3.4 percent of GDP in 2009, far less than the global average of 7 percent. China's per capita premium was $121, compared with the global average of $595.

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Meanwhile, attracted by the huge growth potential, more banks are expanding into the insurance sector.

China Construction Bank Corp tied up with Taiwan's China Life Insurance Co to invest in Pacific Antai Life Insurance Co, the country's second-largest lender said in a statement on Monday. The bank bought 1 percent of Shanghai-based Pacific Antai, boosting its stake to 51 percent. And the Taiwan-based insurer plans to pay 379 million yuan ($57 million) for a 19.9 percent stake.

Both companies bought the shares from China Pacific Insurance Co, which held a 50 percent stake in Pacific Antai.

In May, Bank of Beijing acquired a 50 percent stake from Beijing Capital Group to be a stakeholder in ING-BOB Life Insurance Co. According to the top management of the joint venture insurer, the bank's stake purchase helped the company realize better synergy in terms of sales channels and target customers.

"To combine foreign stakeholders' strengths in product design and risk management with local partners' advantages in marketing and knowledge about the local market is key for success," said Zhang Jianfeng, general manager of ING-BOB Life.