Research On The Profit Ability Of The Insurance Companies Of China On Embedded Value

In recent years, Chinese insurance developed rapidly, such as number of theinsurance companies, premium income increasing. Since2006, China has quietly enteredthe insurance industry “the gold for ten years”. The management of insurance company isdesigned for shareholders and customers to create lasting value. As insurance products,long-term and insurance profit delay characteristic, rely solely on traditional financialstatement data has been unable to reflect the true value. Embedded value(EV) taking intoaccount existing business future profit streams, from a long-term perspective of theinsurance company’s operating results, so it can be better reflecting the insuranceenterprise’s profit ability, can correct evaluation and incentive value.First of all, this paper on corporate profitability evaluation are briefly introduced inthe paper, the common enterprise profitability evaluation methods were introduced andcompared, chose the profitability index. Secondly, based on the embedded value theoryand calculation method of a little description, and to the New China Life InsuranceCompany Limited, as an example, on the embedded value computing explained. Finally,the selected index based model, with three Chinese listed insurance companies–ChinaLife Insurance Company Limited, China Ping An insurance (Group) company Limitedand China Pacific insurance (Group) company Limited–for example. Three companieson2007-2010years of profitability index and intrinsic value of each index of therelevance of the test, with the actual test results showed this model system based onactual effect and practicality. I hope this viewpoint and method can play a role, inChinese insurance company continued development of the environment, to our countrylisted insurance companies profit ability research contribution.