| The capital adequacy is an important factor to the development ofthe insurance industry of China. In recent years, China's insuranceindustry has been growing rapidly and calls for more capital. Becauseinsurance companies need a large sum of capital, they turn to capitalmarket to raise funds. An important method is to go listed. At the end of2003, China Life was listed in both America and Hong Kong andperformed very well. After that, many life insurance companies in Chinaare preparing for listing. The listing of China's life insurance companiesis inevitable. The separation of ownership and management is an important featureof modern enterprises, this calls for the report by managers to ownersabout the performance of the business. This situation is particularly trueto listed life insurance companies. Hence, the standardization ofinformation process and disclosure is very important. Because financialinformation is comprehensive, comparable, and understandable, it is themain part of the information disclosure of listed insurance companies. Life insurance industry is a special one; in many aspects the currentaccounting system of China is not suitable to it. Therefore, to discuss theaccounting process and relevant financial information disclosure oflisted life insurance companies is of great importance. In this paper, I discussed the issues from the viewpoint of the need ofinvestors. Currently, there's no suitable accounting standard system tolisted life insurance companies, and there are so many issues to bediscussed. I chose two issues to discuss in this paper, i.e. the investmentof insurance funds and the policy reserve. In America and UK, the life insurance industry and capital marketare fairly developed, and the global congruence of accounting standardsis the current trend, I believe that the relevant accounting standards andrules set down by America, UK, and IASB can be used for reference.Therefore, I chose the three systems to compare and discuss, tried to findout the merits and limitations of different methods and approaches, thenI tried to propose suitable accounting methods and disclosure demandsaccording to China's situation. This paper consists of 5 parts, including introduction and 4 chapters. In the introduction, I pointed out the significance of the study, thefocus and frame of this paper. In the first chapter, firstly I introduced the principles and trends offinancial information disclosure; then I discussed the aim and mode ofinsurance accounting; next I discussed the general situation of China'sinsurance accounting, and pointed out there was no suitable accountingsystem for insurance industry and couldn't fulfill the accounting aim;lastly I briefly introduced relevant standard systems and rules inAmerica, UK, and IASB. The focus of chapter 2 is investment. Through the compare ofrelevant rules, I found the main differences of the three systems are thesubsequent measurement of security investment, the report of thedifference between the fair values of two report dates, and theaccounting policy about the investment property. After the study ofdifferent accounting policies and methods, I recommended to reportsecurity investment at fair value except for specific items, to reportdirectly in equity the difference between fair values, and to reportinvestment property separately at fair value. The focus of chapter 3 is the life insurance policy reserve. In thischapter, I introduced one new method recommended by IASB, which isto use the risk-adjusted discount rate to determine the amount of thepolicy reserve. This method is very different from the popular methodused in practice, which is to use the discount rate based on the estimatedreturn from the assets that are deemed to back the insurance liabilities.The method recommended by IASB is reasonable in theory, but thefeasibility is questionable, especially for today's China. Therefore, Iproposed to use the discount rate based on the return from the assets.Also, I pointed out it was necessary to disclose the sensitivity analysisinformation... |
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