The Analysis Study Of Insurance Fund Utilization In The Capital Market System Of Our Country

Since the government resumed insurance industry in 1980, the Chinese insuranceindustry developed quickly. The nationwide premium income grew swiftly. Howeverthe economic performance of the insurance industry still has not reached the anticipatedgoal. One important reason for this is the backward insurance fund investment. Theutilization rate and return rate of insurance funds are low, which has a direct impact oninsurance companies' clam payment ability and a stable management. This is also ofconcern to the industry's long-term survivability and development. With China's entryto WTO, domestic insurance companies will face huge price competition from foreigncompanies in a scale that was never seen before. By that time the traditional insuranceprofit will disappear and the main profit will be from investment return, which is theinternational practice nowadays. In addition, domestic insurance companies foundthemselves in a more and more difficult situation because the standard interest rate hasbeen lowered eight times in a row since 1997. On the other hand, domestic insurancecompanies have fallen in the difficult position of standard interest continuously felldown eight times since 1997. To ensure the ability to pay back and increase profit, it isurgent for insurance companies to broaden investment channels and develop new waysto invest. In this thesis, the development of insurance fund investment in China is reviewedand the new situation it is in today and the issues there are analyzed. It is proposed thatdomestic insurance companies should learn from advanced experiences in foreigncountries and choose appropriate investment tools based on their own characteristics.They should carry out combination of different investment methods that have goodprofit, high liquidity and low risk.Facing with the problem of large quantity of idle insurance funds and narrowinvestment channel, insurance companies find that investing the funds in capital marketis an inevitable choice. The Insurance Funds' entry to the security market will have anobvious effect to alleviate the management difficulties facing the insurance industry. Asa long-term investor, the insurance companies will also increase the capital marketefficiency and boost its development in our country. This thesis analyzes a variety of ways insurance funds enter the capital market.From the point of insurance investment security, flexibility and return, the author pointsout that new insurance investment funds will be the major investment method while theexisting funds should also be increased. The thesis discusses insurance investmenttheories like risk-profit theory, portfolio management theory, property-debt managementtheory and their applications. A model of the optimal investment proportion forinsurance company is established and the optimal investment proportion of Chineseinsurance companies is calculated by means of mathematical program. Based on these,relevant conclusions are reached. Suggestions are also given to improve Chineseinsurance funds application efficiency.