Life Insurance Company Solvency Assessment And Affecting Factors Analysis

Insurance is the stabilizer of the society, and plays an increasingly important role in today’s modern economy. As the prerequisite for insurance company to survive, solvency not only determines the sustainable development of the insurance industry, but influences the interests of the majority of the insured,it is the core content of all national insurance regulatory authorities to monitor.As important decisive role in the insurance market, the life insurance industry has some of the features, such as:long contract time, large affected by economic environment, worth the investment, and so on. Guaranteeing the solvency of life insurance companies has become the main target of the national insurance regulatory authorities. Various countries also have been looking for and designing all kinds of methods of solvency regulation. For now, the regulatory content of the various countries in the solvency of the insurance company has two main aspects: one is the calculation method of solvency, including cautious evaluation criteria of the assets and liabilities of an insurance company standards, and as well as the financial report, on-site inspection and off-site analysis, etc.; Another is processing method of insufficient solvency of the company, including rectification, takeover, settlement and other regulatory measures.Next is the empirical part of this article, which is also the first major research content of this article-solvency evaluation of several typical comprehensive life insurance company and professional life insurance companies in our country. First, combing the regulatory methods adopted by the main developed countries in the international community, China’s actual situation with internal factors that influence the solvency of life insurance company, the text build a set of evaluation index system of life insurance company solvency, including balance sheets, robustness, profitability, reserve adequacy from four aspects, a total of15indicators. After correlation analysis,11indexes are selected to evaluate solvency. Because this article selects some of samples which are newly established companies and their some calculated indicators are unusual, so the evaluation method choose entropy value method which is not easily affected by the extreme value. About the determination of sample, this paper chose15life insurance companies which have major influence over the life insurance market in our country. About the selection of data, the article use the financial data of the old life insurance companies from2006to2010,and that of the new life insurance companies from the year which they were set up to2010.After preprocessing the selected data, this paper uses entropy method to compare comprehensive life insurance companies and professional life insurance company in the long and short term, and finds that single index method only considers the condition of the life insurance company assets and reserves, ignoring the operation robustness and profitability, etc., and the empirical results verifies the evaluation results based on entropy value method are more credibility. Finally, the paper analyzes the internal reasons which cause the difference between two types of life insurance company solvency.The previous analysis only focus on the internal influence factors of life insurance company solvency, the next step is to analyze the external environment, thus get more comprehensive analysis on changes of the solvency, this also is the article’s second-largest main content--analysis on the relationship between external influence factors and the life insurance company solvency. Here, the article selects5indicators:average solvency evaluation value of two types of life insurance companies, Per capita GDP growth, the rate of inflation (the consumer price index), average real interest rates, and population aging rate, getting grey correlation along four external influence factors that influence the life insurance company solvency. Considering that China’s population aging intensifies, the article adds the impact of demographic patterns, that is, the different effects of the population aging rate on the solvency of comprehensive life insurance company and professional life insurance company, and finds that aging intensification is not conducive to comprehensive life insurance company solvency, but means more opportunities for professional life insurance company solvency, and this is one of the innovations of this article.Through the analysis, this paper draws the following conclusion:First, solvency assessment based on the one indicator is not as good as that based on statistics method using a number of indicators.Second, comprehensive life insurance company’s solvency is overall higher than that of the professional life insurance company, especially is large-scale comprehensive life insurance company. In4professional life insurance companies, Ping an Health has the highest solvency, and a professional life insurance company which belongs to a large insurance group has higher solvency than an independent health insurance company.Third, in the concrete internal reasons of causing solvency differences, this paper summarizes the following points:(1) The development of most comprehensive life insurance companies has been into maturity, their solvency is higher than professional life insurance companies and foreign-based life insurance companies, they have been completely get rid of the pressure of solvency with prudent management operations, strong profitability and sufficient reserve. But veteran comprehensive life insurance companies are not as reasonable as professional life insurance companies and the newly established comprehensive life insurance companies in terms of capital structure.(2)The development of professional insurance company is still in its early stage, basically still in a state of continuing losses, and relatively poor in terms of robustness and earnings, with lower solvency than comprehensive life insurance company.Fourth, about the external influence factors determine life insurance company solvency, this paper draws the following conclusions:(1) The most important external factors affect the comprehensive life insurance company solvency is the growth rate of GDP per capita, followed by the volatility of the price level, but the intensification of the aging of the population is a kind of challenge and pressure for comprehensive life insurance company solvency.(2) The most important external factors that affect the professional life insurance company solvency is the rate of population aging, followed by the growth rate of GDP per capita.Affect professional life insurance company solvency is the most important external factor is the rate of population aging, the speeding up of aging population in China instead of the more beneficial to the development of professional life insurance company, the second is the growth rate of GDP per capita.The most important external factors that affect the professional life insurance company solvency rate of population aging, and the accelerated process of population aging in China more but is conducive to the professional development of the life insurance companies, followed by the growth rate of per capita GDP. The more accelerated progress of population aging in our country at present is beneficial to the development of professional life insurance company. Professional life insurance company should seize this favorable opportunity, highlight its characteristics of specialization and differentiation, and become the important force to pull the development of China’s life insurance and promote harmonious society.Integrating internal and external cause of affecting the solvency of two types of life insurance company, we can draw the following conclusions:(1)For the present, the solvency of professional life insurance company is not as higher as than that of comprehensive life insurance company, which is mainly affected by market share, premium income and the impact of economic growth.(2) With the deepening of China’s aging population, and the strong support of our country on the professional management in the future, the development of professional life insurance company will gradually change better and better, also their solvency will be more and more adequate.