Research On The Effect Of Insurance Capital Investment Upon The Solvency Of Insurance Company

During the development of modern insurance industry,the investment of insurance funds have already been a system with the survival and development of insurance industry. The operation profits and the investment profits are mainstay of insurance profits. The development of insurance funds'investment can expend the payoff ability of insurance company and the management stability, at the same time; it also can reduce the premium rate, lighten the burden of policyholder and enhance the company's competition.Investment as a hedge against inflation for insurance funds has a history of 300 years of development,and has been widely accepted by most of the enterprises abroad and achieved good results. In our country, the insurance funds'investment has entered a phase of the development of norms, the insurance companies who engaged in the insurance capital investment have already benefited from the good returns of investment, because reasonable insurance capital investments have a great effect for the solvency of insurance companies. The use of insurance funds in order to obtain the profits not only becomes an important part of the insurance industry, but also be an important prerequisite for the survival and development of the insurance industry.But insurance capital investment has two different aspects for the insurance company. Under the condition that the insurance industry has already been linking up with the capital market, diversification with investment forms is able to disperse investment risk, increases profits and strengthens the solvency margin of the life insurance company. At the other side, if the capital market is in recession periods, the financial risks in capital market can transfer to the insurance industry by the insurance capitals that invested in the capital market, thereby arouses the alteration of the corporate assets of insurance company and affects the solvency margin ultimately, and it is likely to make the insurance company under the condition of solvency deficiency.Therefore, by studying the effects of the capital investment to the insurance company's solvency ability and researching the approaches of the insurance funds'investment, this paper has important academic and practical significance to the risk inspection and risk control of the insurance company. Firstly, this paper reviews the theoretical process on the concept of solvency of insurance company, probes into the intension of solvency and risk of solvency, and brings forward the concept of solvency in this paper in order to define clearly the scope of our study and discussion. Subsequently, this paper analyzes various factors which mostly affect the solvency of insurance company, expatiates these risk factors how to affect the solvency from internal factors and external factors. After this, the paper outlines the concepts of solvency regulation, points out that the solvency regulation can be divided into normal levels of supervision and solvency margin supervision. Then from perspective of the solvency supervision, the paper discuss details of three conception:the minimum solvency margin,the actual solvency margin and statutory solvency.Secondary, the paper introduces the investment regulation and the investment status of insurance funds of insurance company in our country, points out that the investment of insurance funds is in order. The paper also probes into that the insurance funds'investment has positive and negative effects on the solvency of insurance company: on one hand the investment profits can be used to make up the deficit that appeared on the insurance operations, take actual data as evidence to explain that both abroad and domestic insurance companies exist this phenomenon, on the other hand, it take a series of insolvent events of insurance company in Japan after the second postwar as example, explains that the insurance capital investment has disadvantageous side on the insurance company, reminds us that when it are investing the insurance funds, it should control the invest risks and must be sure that the funds not be invested in some high risk projects blindly in order to pursue high returns.Following, the paper inspects three representative life insurance companies in the domestic lift insurance industry: the China Life Insurance Company,the China Pacific Life Insurance Company,the Ping An Life Insurance Company, carries through demonstration analysis in investment return,capital abundance and solvency margin for these three insurance companies. According to a series of regulations that announced by the China Insurance Regulatory Commission, it calculates the actual solvency margin and the minimum solvency margin for these three insurance companies from year 2003 to 2006, alone with the situation that how the investment return influence the solvency margin of insurance companies. It reaches the following conclusion: the investment ability strengthens unceasingly for these domestic insurance companies; the solvency ability of domestic insurance industry has great improvement in recent years; the arising in investment return is one of the important factors that lead to the improvement in solvency of insurance company; some of insurance companies are insufficiency in capital requirement gravely, this can influence solvency margin for these companies.Finally, combining with the discussion contents above, the paper sums up several main arguments and put forward some proposals: accelerate the product transformation, reduce the deficiency in interest rate, enhance the operation revenues; expand the channels to increase the capital requirement, raise the capital adequacy ratio; continue broadening the investment channels to improve the investment profits that the insurance funds invested in the capital market; encourage the insurance funds to invest in the state keystone construction projects and the foundation construction projects which have long-term and steady return.The innovation points in this paper: look through the domestic research information about the investment affects to solvency, it can see that lots of them are discussing the factors that influence the solvency firstly, and then pointing out that the insurance capital investment is one of the important factors. But in this paper, it concentrates on discussing the degree that the investment affects the solvency. Firstly, it discusses the how the investment influences solvency, from positive and negative aspects, and points out that inappropriate investment can lead to the insurance companies'lack of solvency. Then, this paper takes three representative life insurance companies as example and carries through quantitative analysis for investment returns and solvency margin, studies the degree that the insurance capital investment can influence the solvency margin of insurance company from demonstration research.