| During the past one or two decades, the Chinese life insurance industry has achieved the great development with the volume increasing continuously. However, suffering the large interest spread, the lack of investing channels and vicious price competition, etc., the Chinese life insurers underwrote many low quality policies, which makes them accumulate the huge risk. At the same time, the insurers need urgently to enhance their capital strength to face challenge of the market competition. Under these pressures, the importance of capital in life insurance operation is given prominence clearly. So considering the matching correlation between life business and capital is very urgent.At present, the Chinese life insurers are positive to raise capital through various ways, for example, China Life Co. has been listed on HongKong and NewYork stock market, New China Life Co. is anticipated to be listed on the domestic stock market soon in this year. Increasing capital will make the power of shareholders more diversified and the operational structure more standard. In order to adapt to the change, the companies need to pay more attention to guarantee the shareholders' benefits through enhancing the capital management. Therefore, thinking the problem of capital management for the Chinese life insurers is very realistic.Life insurance business has close relationship with capital. The underwriting volume constitutes the insurer's main liability, and capital provides guarantee for the implement of the liability. The amount of capital is decided by the degree of business risk. At the same time, capital and liability, also called volume, are bringing another question-capital structure and the cost of capital. The efficiency of capital should also be considered when deciding the capital amount. Therefore, there is wide space in theory to study the matching relationship between volume and capital.The current domestic documents mainly study capital from the angle of the regulation, but less from the angle of the company. And the documents only point that life business and capital should match, but there is no thorough analysis on what on earth is their correlation. This text is using qualitative and quantitative analytical methods to study the relationship between volume and capital, and then is providing corresponding suggestions.This article consists of an introduction and four chapters.The introduction generally discusses the starting point, the framework and the thinking train of the article from four aspects: the writing motive, the past research on this topic, the writing meaning and the methods used.Chapter One "defining the business, capital and their relationship in life insurance companies" mainly selects indexes of measuring volume, capital and their relationship, and compares and analyses the related concepts to make preparation for the following discussion. It analyses the life business from three aspects: the categories of life products, the amount of volume and the structure of business, and chooses premium as the index to measure volume. Then it chooses owner's equity as the index to measure capital, and gives a brief description of the relationship between capital and solvency. Next, it gives the reason why the article chooses the premium/capital as the ratio to evaluate the degree of adequacy of capital.Chapter Two "the theoretic analysis of the correlation between business and capital in the life insurance companies" analyses the relationship from angle of solvency and of the maximization of company value under the guiding principle that matching volume and capital should balance two target: safety and efficiency. In the aspect of solvency, this chapter analyses the relationship from the amount of volume, the quality of business and the structure of business. In the aspect of capital efficiency, it probes the relationship from the capital structure and the cost of capital.Chapter Three "the empirical analysis of the correlation between business and capital in the life insuran... |
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