Research On Asset-Liability-Management For Insurance Companies

Although the overall sales of life insurance policies has been increasing recently in China, insurance companies are facing a significant loss of interest difference, as a consequence of the issuance of high-interest insurance policies in the past several years. The opposite loss of interest difference is becoming the biggest headache for life insurance companies. How to release the life insurance companies from the heavy burden of loss of interest difference is one of the biggest problems in the life insurance industry. The loss of interest difference in life insurance is also one of the biggest risks that affects the profit capability and business stability of a life insurance company.The research in loss of interest difference have been mostly focusing on discussions in aimless expansion of market share and irrational sales of high-interest policies, etc. This paper first analyzes the problem of loss of interest difference, points out that the source of loss of interest difference is the mismatch between asset and liability of the insurance company, and concludes that Asset-Liability-Management is an effective way to manage risks for insurance companies. This paper summarizes several Asset-Liability-Management techniques, such as cash flow matching, cash flow testing, immune techniques, and dynamic finance/accounting analysis techniques. It also discusses and projects the selection of Assets-Liability-Management framework in Chinese life insurance business. At the end, the paper points out some future research directions in Asset- Liability-Management.The theoretical value of the topic is that this paper further studies Asset-Liability- Management of insurance companies in a constantly changing business environment. It not only broadens research fields of Asset-Liability-Management of insurance companies, but also enriches the research methodology and improves related theories. This paper is trying to make some innovation on theories of Assets-Liability -Management of insurance companies. Meanwhile, it is trying to explore a method on operational level which can be adapted to Chinese market.The research object of this paper is loss of interest difference in Chinese life insurance industry.This paper consists of 5 chapters.Chapter one introduces the background and significance of topic selection, literature review and main content of this paper.Chapter two describes the affect to life insurance industry. First, it defines the meaning of risk of loss of interest difference. Next, it analyzes causes of risk of loss of interest difference. Last, it points out the affect to life insurance industry.Chapter three introduces the relationship between assets and liabilities. First, it defines the meaning of Asset-Liability-Management, Next, it describes the theories about Asset-Liability-Management.Chapter four describes the model of Asset-Liability-Management. First, it describes those models of Asset-Liability-Management that have been put forward . Then, it points out which model that we could use in China.Chapter five studies some argumentative questions about problems and solutions of Asset-Liability-Management. It points out some measures to deal with the problem in the field of Asset-Liability-Management.