Research On The Risk Management Of Insurance Funds Invest In Infrastructure

In recent years, the insurance industry has developed rapidly. From 2007 to 2015, the growth rate of the application balance of China’s insurance funds is averagely over 10%.By 2015, the application balance of the insurance funds is nearly 11.18 trillion, which increases 19.81%. The amount of insurance funds is very huge. Most of them have longevity, which are the characteristics of the funds needed for infrastructure fits. Hence,the infrastructure could become a channel for the investment of insurance funds.Regulators gradually open investment channels for insurance funds. In 2013, China Insurance Regulatory Commission formulated the "Notice on debt investment plan registration related matters," and that plans to issue insurance claims filing system into a registration system, which simplify the setting program of bond planning. In the past decade, the government and the China Insurance Regulatory Commission continuously release conditions of insurance funds to invest in infrastructure, so that the insurance funds to invest in infrastructure construction has been policy-supported. Because of the demand of investment of insurance funds as well as the process of urbanization and economic development, China began to encourage investment on infrastructure. This will not only ease the pressure on government financial funds, but also be implemented to improve and optimize the allocation of investment income.Insurance funds to invest in infrastructure is generally implicit government commitment to provide a bank guarantee or have special repayment support and other aspects of security. But the local debt risk restricts the local finance sustainabledevelopment. The quality infrastructure projects are gradually reduced, coupled with the first unsecured insurance funds set up to invest in infrastructure projects in 2003, there are potential risks in many ways exposed venture capital investment in infrastructure.Although the insurance funds to invest in infrastructure there is a risk, but can not deny its feasibility. Therefore, insurance agencies carrying out investment in infrastructure should be strengthened risk management.Firstly, this paper analyzed the necessity and feasibility of insurance funds to invest in infrastructure, combined with the status of the entire insurance investment current situation and issues.In addition, I studied current situation and issues of investment in infrastructure,and analysed liquidity risk, earnings risk and credit risk, etc. Finally based on the VaR to measure the risk of insurance funds to invest in infrastructure to calculate VaR, marginal VaR, component VaR and incremental VaR. Research indicates that the greatest risk is investment in infrastructure in these five assets; the additional impact of infrastructure investment on the entire investment portfolio risk is relatively large; and the risk of investment in infrastructure accounted for the overall portfolio risk contribution maximum.Although VaR has limitations to some extent, by a simple calculation of VaR also reflects the insurance risk capital investments in infrastructure which should not be underestimated so it should arouse our attention. Finally, according to the latest market situation and risk control requirements, the insurance agencies and the relevant regulatory authorities propose an improved method of insurance funds to invest in infrastructure risk management.