China's Life Insurance Company Solvency Risk Early Warning Methods

In recent years, with the adjustment of economic structure, insurance industry obtained rapidly development in our country. As an important part of the insurance industry, Life Insurance has 30% annual rate of rapid growth, the depth of insurance continue to increase, has far-reaching impact to socio-economic development. At home and abroad research experience has shown that solvency reach the standard is the foundation of life insurance company, for it can against business risks, make the company comprehensive, coordinated development. Lack of solvency is not only effect the sustainable development of life insurance company, but also influence the development of insurance industry, besides endanger the financial market, moreover block the development of national economy. Therefore, how prosecute solvency risk early warning research, especially dynamic warning, has an important effect on life insurance steady development.In this paper, from solvency supervise angle, take China Life Insurance Company for example, applying gray neural network theory, establish an solvency risk early warning system. Firstly, conclude and pack up the the setting of solvency supervise system and early warning method at home and abroad, analysis the solvency actuality and supervise mode characteristic of our country life insurance company. Then combine the supervise indicators which come on in the United States IRIS system, pick up 12 factors which impact life insurance company solvency from four aspects:capital adequacy, profitability, operating expenses, the external economic environment. Take China Life Insurance Company data for example, use grey relational analysis to analyze the 12 factors, according to relational sequence find out 7 indicators for risk early warning system design. In conclusion, according to gray neural network theory, design a dynamic risk early warning system, and present the early warning monitoring specific methods and steps. Demonstration research result which select China Life Insurance Company as an example shown that this system can making early warning and monitoring dynamicly, and also can provide reference for life insurance company and insurance supervise department.