The Empiricail Study For The Impact Of The Capital Structure On The Performance Of Chinese Insurance Companies

Since the "No.10 National notice of the State Council" released,the insurance industry has drawn great attention from all levels.The insurance companies have become an important pillar of Chinese social security system and an important way for financing.As an important part of the national economics in financial industry,the insurance companies not only play a vital role in stability,but also become an important power and guarantee to promote economic development.At the same time,according to WTO commitments,Chinese insurance industry has become the financial industry with earliest opening,maximum opening and the shortest open transition period.To a certain extent it can be said that the insurance industry is a pointer to the financial industry.In recent years,with the great development of Chinese insurance industry,capital structure and corporate performance of insurance companies are constantly changing,but the impact of capital structure on the performance of the insurance companies has no specific research results.This paper first introduces the research background and significance,and reviews the existed model of the theoretical system and the literatures on capital structure and corporate performance at home and abroad.Then,according to the historical data,I analyze the changes in Chinese insurance companies' current capital structure and corporate performance trend.Those works give the theory preparation and basic information storage for empirical study.Then according to the experience of previous studies and the analysis of the insurance industry's selection,I select asset-liability ratio,solvency ratios,equity funds and net premiums written as explanatory variables of capital structure of insurance companies and the rate of return on equity,investment yield and profit margin as the explained variables of corporate performance.With the use of the database ORBIS,Chinese life insurance companies and property insurance companies were carried out with empirical analysis to explore the impact of capital structure on performance of Chinese insurance companies.This paper finds that the capital structure of Chinese insurance companies has a significant impact on corporate performance.For life insurance companies,the way to improve its ROE can be "reduce the asset-liability ratio","improve solvency ratio"or"increase equity funds".And the more efficient methods are "reduce the asset-liability ratio" and "increase equity funds".The way to improve its investment yields can be"increase equity funds" and "reduce net premiums written".The way to enhance its profit margin can be "lower asset-liability ratio'',"lower solvency ratios","increase equity funds" and "reduce the net premium written".And all margin methodology will be considered.For property insurance companies,the way to improve its ROE can be "reduce the asset-liability ratio","improve solvency ratio" or "increase equity funds".And the more efficient method is "improve solvency ratios".The way to improve its investment yields can be "increase equity funds" and "reduce net premiums written".And all margin methodology will be considered.The way to enhance its profit margin can be "lower asset-liability ratio","lower solvency ratios","increase equity funds" and "reduce the net premium written".But the efficient of those methods to improve profit margin is higher with life insurance companies.Finally,according to the research results,this paper gives the conclusions and suggestions:strengthen the dynamic optimization of capital structure consciousness,actively establish and improve the company's capital structure dynamic adjustment mechanism,optimize the capital structure with the characteristics of the specific insurance company,maximize the value of the insurance company;rational development,reduce the blind expansion of the scale,change operating from a single debt business gradually to the management of business assets,return to a reasonable level with the amount of absorbed premium,enhance the companies' profitability and the actual level of investment income;chose reasonable level of debt with their actual characteristics,reduce the asset-liabilities rate to enhance the company's profitability,explore the ways of internal financing,improve the ability of inner financing,insure the development of safety and stability;promote the coordinated bond market and the stock market,explore the ways of insurance enterprises financing,enhance liquidity and financing efficiency,let the development of the bond market and the stock market better serve the companies;improve information disclosure and transparency,improve the information communication methods,enhance the confidence of investors,promote social investment,increase the market value of the companies,and guarantee the stability of the development of companies and market.