Research On Investment Behavior Optimizations Of Life Insurance Companies Based On The C-ROSS

Since 2012,China’s insurance industry has entered the regulatory era of "opening up the front end and controlling the back end".The regulatory agencies want to improve the initiative and flexibility of insurance investment and operation by widening the investment channels of insurance companies and gradually abolishing the upper limit of predetermined interest rate.However,the change of regulatory policy of and the macro environment of low interest rate in China force life insurance companies to face more complex risks,so the first-generation solvency regulatory system oriented by scale can no longer accurately measure the capital required by insurance companies under the new situation,and the second-generation solvency supervision system construction plan(namely the C-ROSS)came into being.Through the three pillars of quantitative supervision,qualitative supervision and market constraints,the C-ROSS can more comprehensively and scientifically measure the risk capital and risk management ability required by insurance companies,and the investment behavior of life insurance companies will also be directly linked with the measurement of regulatory capital and risk rating.Therefore,under the macro environment of low interest rate and fierce market competition,how to optimize the investment behavior to seek a balance between improving the investment income and meeting the regulatory requirements has become an urgent problem for life insurance companies.This paper first analyzes the current situation of investment behavior in China’s life insurance industry and finds that life insurance companies generally have the problems of short investment perspective and weak asset liability management ability,which exposes the hidden danger of imperfect risk management system.Then,this paper combs the influence mechanism of the C-ROSS on the investment behavior of life insurance companies,including quantitative capital requirements,risk management requirements and evaluation,and comprehensive risk rating.It concludes that the problems existing in the investment behavior of life insurance companies in China are that they will face higher market risk,credit risk and control risk under the macro environment of low interest rate,so as to raise the regulatory capital,reduce the risk rating and limit its further development.Based on this,this paper constructs the longterm asset allocation model and the long-term asset allocation model embedded in asset liability management.The empirical results show that when life insurance companies turn to the perspective of long-term investment and allocate assets based on asset liability management,they can improve the investment return of portfolio on the premise of meeting regulatory capital.Finally,this paper puts forward the following suggestions for life insurance companies to optimize their investment behavior:life insurance companies should adhere to value investment,long-term investment and prudent investment;establish a continuous two-way asset liability coordination mechanism and build a medium and long-term risk oriented performance appraisal system on the basis of a comprehensive risk management system.