The Analysis of Solvency Evaluation System for Life Insurance Company in China

Since the 21st century, the global financial crisis has brought about great challenges to the regulation on insurance market. As one of the basic indexes to measure the financial condition of insurance companies, solvency is the core of the supervision and management. Studying on the life insurance company's solvency to build a set of evaluation system, helps to provide theory support and empirical basis for the supervision and control by relevant department. On the one hand, the solvency of life insurance industry is systematically and qualitatively discussed with direct and environmental factors through theoretical analysis. On the other hand, combining with China's actual situation and choosing indicators of these two kinds of factors, under the assistance of SPSS, seven typical companies in domestic life insurance market are used to empirical analysis by factor analysis as well as correlation analysis with the data from 2007 to 2012. The result shows that the solvency not only can be described by internal factors such as capital structure and premium scale, asset quality, growth and profitability, but also has relationship with external factors such as GDP growth rate, inflation rate and real interest rates, which support the theory of qualitative analysis in turn. Finally, according to the solvency evaluation system established above, from the aspects of internal corporate governance and external economic environment, this paper puts forward some corresponding policy recommendations for solvency regulation on life insurance companies in our country.