China Life Insurance (Group) Company Equity Investment Case Analysis

At present,the uncertainty of global financial and economic growth has increased,the stock market of major economies has experienced frequent fluctuations,and emerging market economies have also experienced significant currency depreciation.A series of problems have arisen,such as rising national debt ratios,expanding asset bubbles,and a significant decline in national financial stability.These problems have made global financial stability face increasingly severe challenges.There are also many problems in China's financial industry,including: the financial industry's share of GDP is rising,the financial industry's return on investment is higher than the industrial production rate of return and this gap is increasing,the banking industry is over-seeking off-balance sheet profits,society Financing credit has a series of structural problems,the difficulty of real economic management,and the phenomenon of social funds appearing “de-integration”.Because of its long insurance period,large scale of funds and stable sources,insurance funds play an important and positive role in social and economic operations,and their equity investment plays an increasingly important role in financial investment.However,most of the researches on insurance fund equity investment mainly focus on equity investment motivation and investment performance evaluation.Among them,the research on performance evaluation mainly focuses on the performance evaluation of private equity investment.The evaluation of the performance of insurance fund equity investment has not yet formed a complete system.In view of this,this paper uses case analysis to select two major investment events of China Life Insurance in recent years,one of which is China Life Insurance's participation in China Unicom's mixed reform,and the other is China Life Insurance's acquisition of Guangfa Bank,which has combed China Life's equity investment.It sorts out the motivation and equity investment process of China Life equity investment,and uses the event research method to analyze the short-term performance of China Life's two investment events respectively.Then,using accounting research method,it analyzes China Life's long-term growth ability,profitability and solvency.The analysis results show that in the short-term,during the event window period,China Life's excess return rate and cumulative excess return rate performed well in the first two days after the China Life equity investment event,but then investors generally returned to rationality.The excess return rate and the cumulative excess return rate will change.After the end of the event window of China Life Insurance's participation in China Unicom's mixed reform and participation in Guangfa Bank,the cumulative excess return rate is positive,and the cumulative excess return rate varies.The performance of internal investment is not absolute and requires specific analysis of specific issues.In the long run,China Life's growth ability and profitability are greatly affected by market volatility.And compared with the other two insurance companies of comparable size in the industry,the performance is not outstanding.But its solvency adequacy ratio remains at a high level.Finally,according to the long-term and short-term performance of China Life equity investment,China Life Insurance needs to further improve the risk isolation and risk supervision system,improve the information collection and investigation ability before project investment,focus on post-investment integration and business cooperation and strengthen the construction of an investment talent system.