Study On The Investment Problems In The Life Insurance Industry Based On Asset Liability Management

From the end of 1980s to the beginning of 1990s, American life insurance industry suffered large-scale solvency crisis, while many Japanese life insurance companies went bankrupt in late 1990s. Chinese life insurance industry has been developing rapidly since China adopted the policy of reform and opening up over 20 years ago, but as a result of the change of exterior management environment, especially the change of insurance companies' and policy-holders' behaviors caused by the interactive reaction between the financial market and the economic factors, life insurance industry is confronted with huge latent risk, namely asset and liability mismatch risk. Improper liability management or unsuitable asset management is the essential reason for life insurance companies' bankruptcy, also the basic cause for interest rate risk, while insurance investment is an important means to solve the spread risk. The investment environment the Chinese insurance industry is now facing, as well as the complete opening up of insurance business to the foreign capital force life insurance companies to take effective investment measures. Asset Liability Management (ALM), which may fundamentally change investment philosophy and investment strategy of life insurers, enables life insurance companies to avoid all kinds of risks, especially interest rate risk, and make profit with solvency guaranteed.Life insurance investment based on ALM is a complicated problem. To implement ALM and investment successfully , we need to consider, in a comprehensive way, different kinds of factors concerning life insurance companies such as investment portfolio, risk control, investment management system, investment regulation and so on. The development tendency for investment and management of international life insurance industry is to manage investment using ALM theory, to avoid the spread risk by reasonably matching asset and liability. ALM requires the complete integration of investment management, financial control and life insurance actuarial, and close coordination of investment manager, financial expert, and actuary, which unify asset management and liability management. To strengthen investment management, Chinese life insurance companies should, on one...