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China's Life Insurance Company Cash Flow Risk Management Discussed

Posted on:2005-08-20Degree:MasterType:Thesis
Country:ChinaCandidate:Q PanFull Text:PDF
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In the past several decades, the Chinese life insurance industry has developed at its full speed. Enormous variety took place in the environment that Chinese life insurance companies facing. However, these changes provided life insurance companies with both opportunities and challenges. For example, the interest spread risk is not settled yet. The insurance investment funds suffer the limited outlet and low revenue. Varied problems exist in the product's exploitation and marketing. Especially the bankrupt caution of several large Japanese insurance companies makes Chinese life insurance companies pay attention to the companies' risk condition and value risk management.Quite a few bankrupt cases of life insurance companies were due to the cash insolvency. The fact that the life insurance companies don't have the capacity to make prompt cash payment for the policy benefits or other obligations is called the cash flow risk, which may results from every kind of operation risk of insurance companies. This cash insolvency is also named technical insolvency. A large amount of cash flow risk has been accumulated in Chinese life insurance companies. Generally, the occurrence of cash flow risk may not only causes life insurance companies' bankrupt, but also huge credit crisis of the whole industry, which may endanger to the social stability.This dissertation is written from the angle of cash flow analysis, instead of the ALM that is commonly used. According to the condition of our life insurance industry, the investigation point is focused on early warning and countermeasure to the cash flow risk in Chinese life insurance companies.There are five chapters in this dissertation:The first chapter divided into two parts clarifies the characteristics of life insurance. Firstly, the characteristics of life insurance policies and operation. And then the characteristics of life insurance funds. It is necessary to research the cash flow risk based on the analysis of life companies' funds. While, life insurance companies' operation is reflected by the activities of life insurance funds. Besides, some traits of it may affect the companies' cash flow directly. So chapter one is the foundation of the entire dissertation.Chapter two investigates the cash flow risk in life insurance companies in detail. The whole logic structure of this chapter is from universality to particularity. That is to say, finding the real reasons bringing on the cash flow risk in Chinese life insurance companies is based upon the general risk factors of cash flow risk. This chapter consists of three flowing sections: The cash flow in life insurance companies; cash flow risk research in life insurance companies; cash flow risk research in Chinese life insurance companies. This chapter shares a close relationship with the following three chapters. They are effective ways to let Chinese life insurance companies evade the cash flow risk or strengthen cash flow risk management.In chapter three, cash flow testing, a kind of dynamic solvency test method is introduced. Through the cash flow testing to value the liquidity of assets and liabilities of life insurance companies, actuaries can find whether they match with each other in the form of cash. The author expounds several questions in this section, such as "What's cash flow testing?", "How does cash flow testing work?", "Which disadvantage does cash flow testing owe?".In chapter four, the author studies about establishing the cash flow accounting in Chinese life insurance companies. Since the accounting information is for the benefit of users, the amalgamation of financial accounting and management accounting gave birth to the cash flow accounting, which may reflect the true financial condition of life insurance companies. The foundation and components of cash flow accounting are explained respectively. At last, the application of cash flow accounting in Chinese life insurance companies is discussed.Chapter five is concerned upon some other means to so...
Keywords/Search Tags:Life Insurance, Cash Flow Risk, Cash Flow Testing, Cash Flow Accounting
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