Management Review

›› 2015, Vol. 27 ›› Issue (9): 59-68.

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Active Capital Adjustment or Passive Supervision Constraint?——Research on the Influencing Factors of Actual Capital and Statutory Capital in Life Insurance Companies

Zheng Sujin1,2, Wang Lizhen1, Lin Yuanzhen3   

  1. 1. School of Insurance, Central University of Finance and Economics, Beijing 100081;
    2. China Institute for Actuarial Science, Central University of Finance and Economics, Beijing 100081;
    3. Metlife Inc., Wilmington 19801
  • Received:2015-01-13 Online:2015-09-30 Published:2015-09-29

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Abstract:

Using the panel data of 46 life and health insurance companies from public disclosure of information, this paper examines the factors affecting actual capital and statutory capital, and studies their action mechanisms. We find that actual capital can reflect underwriting risk, but not investing risk, while statutory capital can reflect neither underwriting risk nor investing risk. We also find it is solvency ratio of 150% rather than statutory capital that confines actual capital quickly and efficiently. The results show that, life and health insurance companies still can't improve capital structure, and they just maintain the solvency standard passively, so it is necessary to raise the capacity of capital management and risk control.

Key words: actual capital, statutory capital, life insurance company, solvency