| The capital market has experienced a major fluctuation from 2007 to 2008. The life insurance industry has faced significant losses either in the domestic stock market or foreign markets. On the one hand, due to the stock market, the company's real capital has declined. On the other hand, because of the explosive growth of the banc assurance business, the premium has grown rapidly. Then the minimum capital requirements of the life insurance company was rising, accelerating the decline of the company's solvency adequacy rate. For example, PING AN Life insurance company's solvency adequacy has declined form 287.9 % (in 2007) to 121.3 % (in 2008). This indicator was closing the monitoring indicator of 100%. Recently, Ping An Insurance Group increases 20,000,000,000 Yuan to Ping An Life, hoping to restore the level of real capital. Although no life insurance company lack liquidity or facing liquidity risk, but we should be aware of the underlying liquidity risk of life insurance through the capital market volatility. But the previous studies on the liquidity paid more attention to the property insurance company, ignoring the life insurance company. Especially for life insurance company's operation and development today is so different from traditional company. So we have to consider how to strengthen the assessment of Life Insurance Company, in order to prevent the emergence of the liquidity crisis.Insurance rating has a long history in American. The first rating agency was founded in 1899, other developed countries have attached great importance to the insurance rating system. Insurance rating is that the independent social credit rating agencies use certain methods and symbol to rate insurance companies, evaluate the financial strength and operational stability is the essence of insurance rating. The result of the rating can show some risks of the company. Among rating processes of all rating agencies, liquidity analysis is an essential part. They consider that liquidity situation is a important criterion to measure a company's financial strength. Under this background, this thesis first elaborates the meaning of liquidity risk and the features of life insurance liquidity. Then discuss the liquidity risk of the domestic life insurance company from assets and liabilities. Moreover, this thesis shows that when investment income declined rapidly, some companies'premium grew fast because of investment-linked life insurance products. At last may lead mismatch of assets and liabilities. So liquidity risk assessment is extremely important. However, the methods that how to measure the liquidity risk is deficient. In this case, this thesis learns from the liquidity model that rating agencies use, discuss how to evaluate liquidity risk of domestic life insurance companies. The meanwhile this thesis also introduce pressure test to insurance, may give a new thinking of the life insurance liquidity risk.The whole thesis consists of five chapters:Chapter one serves as an introduction. It firstly defines the concept of life insurance liquidity, and describes the analytical framework and content, as well as the analytical method of liquidity model.Chapter two introduces the definition of liquidity, and then analyzes the characteristics of life insurance's asset liquidity and liability liquidity. At last, it shows examples that some life insurance companies went bankrupt in 1990s in American, indicates that liquidity crisis is the important reason of the bankruptcy of Life Insurance Company.Chapter three is a analysis of the practical liquidity situation in China. This chapter discusses the liquidity risk in assets and liabilities of our life insurance industry. We come to a conclusion: because of the fluctuation of capital market and unreasonable products mix, our life insurance industry may face liquidity risk. So we have to pay more attention to liquidity risk and discuss the assessment of it.Chapter four is a comparative analysis of liquidity models that different agencies use. This part firstly introduces life insurance rating and its content. Then focuses on liquidity models of A.M.Best and Standard&Poors, compare their rating process and content. Finally, we can see that they have some common points: they all use pressure test, they all give different liquidity rating of different assets, they all give different liquidity rating of different liabilities. Learn from the experience of foreign countries, we can know more useful ways to analyze liquidity of domestic life insurance industry. Chapter five makes creative research to set up the new methods of life insurance company liquidity assessment. At the same time, this thesis also brings some recommendations to life insurance companies for their liquidity risk prevention.The study draws a conclusion according to the practical issues that: assessment of life insurance liquidity is necessary. So I introduce the liquidity models of foreign rating agencies. Although the rating system is not mature in China at present, so the experience from developed country is necessary. But we have to consider the reality of our country, form new idea to monitor liquidity risk in Life Insurance Company. |
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