Research On The Application Of New Financial Instrument Standards In H Life Insurance Company

In March 2017,the Ministry of Finance revised and issued the Accounting Standards for Enterprises No.22-Recognition and Measurement of Financial Instruments,which was required to be implemented from January 1,2018.In order to ensure the smooth application of the new financial instrument standards,the Ministry of Finance allowed insurance companies that meet certain conditions to suspend the application of the new standards until January 1,2026.This paper selects H life Insurance Company,a domestic insurance company that has not applied the new financial instrument standards,as the research object,studying the specific application process of the new financial instrument standards in the enterprise,establishing a set of model concerning the financial asset classification,valuation and impairment in the enterprise,forecasting the application results of the new financial instrument standards in H life Insurance Company,and putting forward relevant suggestions for the application of the new financial instrument standards in H Life Insurance Company.Firstly,this paper analyzes the application status of the old financial instrument standards in H Life Insurance Company,and proposes that insurance companies will face the following challenges in the process of applying the new standards: the difficulty of financial asset classification,the increasing professionalism which is required in financial asset valuation,and the expected credit loss model which is not close to enterprise practice.Secondly,according to the change points of the new standards and the challenges faced by H Life Insurance Company in applying the new financial instrument standards,this paper describes the application process of the new standards in H Life Insurance Company.In terms of the classification of financial assets,different classification models shall be established for different investment products,and more financial assets will be classified as FVTPL.In terms of the valuation of financial assets,the valuation method shall be determined for financial assets that need to be measured at fair value.In terms of the impairment of financial assets,the impairment model of H Life Insurance Company will be established by referring to the Basel model,and the accrual amount of credit losses will increase.On the whole,the application of the new financial instrument standards will reduce the total owner’s equity and improves the net profit in the accounting period.In addition,this paper predicts the application results of the new standards.On one hand,the volatility of profit indicators,investment indicators and solvency indicators of H Life Insurance Company will increase after switching to the new standards.The management will adjust the investment product portfolio according to the application of the new standards,allocate robust products and strengthen the management of credit risk.On the other hand,the new standards will reduce the possibility of earnings management,strengthen the timeliness and integrity of financial reports,improve the cliff effect of asset impairment losses,and weaken the "pro cyclical effect" of financial assets.Finally,this paper puts forward relevant suggestions on the application of the new standards for H Life Insurance Company.In order to ensure the smooth application of the new standards,it is suggested that H Life Insurance Company improve its valuation technology,credit management ability as well as investment assessment indicators.At the same time,it will provide reference for other insurance enterprises that will apply the new financial instrument standards in 2026,which will be helpful for the smooth application of the new standards.