The Application Of The VAR Theory In The Asset Risk Management Of Life Insurance Corporation

With the innovation of life insurance, the intense competition and the development of international financial market, accordingly, we take cognizance of that the administer to the risk of life insurance vocation is especially significant. As a model of measure and control financial risk, the method called VAR (value at risk) was applied abroad in the management of the financial risk. This text will summarize the development and the background of application of the VAR’s theory, and will discuss the basic signification and calculating technique of VAR’s mathematics model, and will make a tentative inquiry into the application of VAR’s theory in the field of capital risk management, information issuance, the measure of investment performance of life insurance corporation and the field of supervision and management of life insurance vocation.Financial risk management is a theme which is focused by the global financial vocation. The department of financial supervision and management in every county attach a lot of importance to the measure and management of risk, and have realized the result might be painful if those corporations do not regard the fundamentality of risk management. It would conduce to the bankruptcy of some people or enterprise, even the national conjuncture and economic crisis.In the modern economics, the factors is more and more which influence the phenomena of economic and financial. The uncertainty is bigger and bigger. The relationship between those financial VAR able becomes more complex. If we just depend upon our instinct, qualitative discursion and simple mathematics analysis, it’s impossible to measure and comprehend the complex and changeful relationship between those variable.Especially because of laxative control, financial innovation and more and more fierce competition, global financial institution and enterprise must choose the more exact and complex financial making-a-price formula, risk model and the arbitrage policy, in order to achieve competitive ascendency. This boost the technology of risk measure and analysis developed quickly.At present, the main methods of financial market risk measure include flexibility, volatility, VAR theory, stress Testing and extremum theory. VAR is the mainstream.Because of the successful practice of VAR in banking, life insurance have initiated to use this technology to improve their risk management level. A lot of insurance companies, annuities, foundation management corporation use VAR to measure and management the market risk.In the background of aboil change for the international financial, life insurance face the more and more complex risk, importing VAR to Chinese life insurance, and using it to measure and management risk, have a important theory and practice value.