China's Life Insurance Investment Risk Management Studies

With the financial liberalization and the development of financial innovation, the competition between the life insurers becomes drastic increasingly in recent years. In order to survive, the life insurance corporations have to pay more attention to investment, as has become the trend of world life insurance industry development.Investment of life insurance in China developed fast in short time. As result of bear market and cut-off of interest-rate in several years, risk of investment becomes more and more violent. As reasonable investors, life insurers have to make decision to choose the best strategy to "maximize the value of portfolio, and minimize the risk cost. Some suggestion is introduced to control risks from micro- and macro- aspect, on the basis of risks confronted with investment of life insurers in our country nowadays.The whole paper is divided into five chapters:In chapter one, the probability and necessity of development life insurance investment is discussed theoretically from characteristic and function of life insurance. In chapter two, risk is defined, and difference between insurance risk and investment risk is identified. Finally a general methodology of risk management is put forward. In chapter three, several kinds of risks are identified, according to actuality and problem that exists in life insurance investment of our country.In chapter four, corporation governance should be strengthened, and scientific techniques such as risk measures, diversity of assets and immunization of interest-rate are taken, so that investment risk can be controlled from microcosmic enterprise angle.In chapter five, some outer endeavors would be made, such as ascertaining investment limit, standardizing information issuance, and strengthening solvency regulation.