A Study On Hedging Strategies Of Securitization Derivatives Of Life Insurance Company

The risk management is the core of the insurance company operating. From the production on the concept of Insurance Risk Securitization in 1973 to the application to Catastrophe Insurance Risk Securitization in the 1990s, it has succeeded to accelerating the convergence of insurance and capital market, attaining the purpose of transferring the Catastrophe Insurance Risk, which bring the chances for insurance company's risk management At the same time, with the developments of the modern life insurance industry, the traditional risk management pattern in life insurance company has exposed many functional shortages: not only can't transferring and hedging risks effectively, but the capacity the capital application is narrow, and but the liquidity and profitability of the capital is bad too.Towards above problems, the present paper introduces the Insurance Risk Securitization tool into the risk management in the life insurance company. On the one hand, elaborating the necessity, superiority and expansibility of the Securitization Expanding in the traditional risk management pattern to conclude that under the risk management securitization operating mode, the traditional risk management pattern makes the valid improvements and active innovations. Then more important facet is the substance of the Life Insurance Securitization method is to realize the innovations on the risk hedging means and is to turn the traditional static hedgmg means to the dynamic hedging means. To this point, the paper will put forward the risk hedging method with the base of the life insurance securitization derivatives, that is to combine the life insurance Securitization productions and the financial derivatives hedging tools (for instance Options), analyzing and discussing their pricing models and hedging parameters to make the important hedging strategies. Basing on the principles, the risk hedging method is applied to the demonstration analysis to guide the practical use. The paper ends with the summary of the research and some enlightenment which offer useful references for the further gropes and innovations...