Life Insurance Company Asset And Liability Management Study

The problem of the structure and management of assets and liabilities has become a great concern for both the life assurance companies and the national insurance regulatory organizations. The improper structure and the mismatch between the assets and liabilities within a life assurance company will result in the deduction in its profitearning capacity as well as its payment capacity. According to some investigations, the same is also with the case of some other countries besides China, such as Japan, Korea, America, England and some European countries. Products with relatively high rate have also been sold, but owing to the different risk controlling strategies, different countries get different result. Typically in Japan, the bankruptcy of Nippon Life Insurance in 1997 and the subsequent bankruptcy of seven life assurance companies brought great shock in the international life assurance industry. Conversely, the proper management of assets and liabilities gained some achievement for American life assurance industry. In face of the current problems existing in the life assurance industry in China, the experience of success and the lesson from the failure remind us of the urgent demand to analyze and manage the assets and liabilities of the life assurancecompanies. Furthermore, because of the late origin and fast development of our country's insurance industry, the theory and practice in insurance financial management do not assort with the business development. Currently, only very few people deal with the study on the management theory of life assurance assets and liabilities.This article makes an attempt to discuss the management of life assurance assets and liabilities from the aspect of assets and liabilities. It is divided into three parts. Part 1 deals with the affirmance and measurement of the insurance assets and liabilities. Because of the particularity of insurance companies, in addition to the general accounting principles, most of the insurance accounting has to comply with the regulatory accounting rules made by the insurance regulatory organizations. This article makes an analysis from these two aspects. Part 2 concentrates on the analysis of the assets and liabilities structure in our country's life assurance companies. On the basis of the report in the Chinese Insurance Annual from 1998 to 2002, this article makes an analysis and calculation of the assets and liabilities structure in various companies.Meanwhile, after analyzing the change in the assets and liabilities in the advanced countries like America, England, Japan and Korea, the article then makes a compare between theirs and our country's current life assurance assets and liabilities structure. Part 3 analyses the problem from three aspects, namely, the assets management, the liabilities management and the assets and liabilities management in life assurance companies.By researching, the major innovations of this paper are: (1) Analysises the assets and liabilities table and the loss and gain table of life insurance companies in China from 1998 to 2001 in detail, comprehensively reflects the structure of assets and liabilites in the life insurance companies even in the whole life insurance industry of our country during the recent years; (2) On the aspect of assets management, our country should reduce the proportion of monetory assets, improve the proportion of investment assets and establish the scientific investment management system, and suitably lower the proporty of the fixed assets on the premise of guaranteeing the operation; (3) On the aspect of management of matching assets and liabilities, the life insurance company of our country should reduce the sales of the policies of prearranged high insuranc rate, develop the new type of life insurance products and match each policy with prearranged high interest rate with high interest rate investment correspondingly ;( 4) As refering tothe index system of assets and liabilities management of the commercial banks in our country , it has explored that of the life insura...