Accounting Treatments, Investment and Risk Regulation of Life Insurance Industry and Departures of Foreign Life Insurers

• Main Authors: LIU, YU-CHENG, 劉育誠
• Other Authors: Yu, Min-Teh
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/05045330024025485177

碩士 === 國立交通大學 === 管理學院財務金融學程 === 103 === After the financial crisis in 2008, many global life insurance groups sold their business units in Taiwan and left Taiwan market one after another. At the end of 2014, there are nine foreign life insurers exited. The study figures out the following reasons of departures of foreign life insurers based on the respects of IFRS 4, risk regulation of RBC and Solvency II and investment of life insurance industry. (1) Negative spread is the common problem for the life insurance industry in Taiwan, especially under the low interest rate environment in global recently. It weakens the profitability of life insurance company more severely. (2) Due to Insurance Groups Directive made by European Union, the European parent company of foreign life insurers will afford additional costs. (3) After IFRS 4 Phase II adoption, increasing liability provisions requirement will cause the parent company of foreign life insurers much financial pressure. (4) Foreign life insurers put emphasis on selling protective life insurance rather than savings-type insurance, the major product type in domestic life insurance industry, will force them to leave Taiwan market. (5) Since bond yield remains low for these years, foreign life insurers prefer investing in fix income products will affect their performance and capital intensity. (6) Insurance supervisory authority treating life insurance company in weak physical condition by regulatory forbearance for a long time makes an unfair competitive market. (7) Global policy adjustment or capital allocation of the parent company of foreign life insurers. Further, since the year of 2008, there have been three life insurance companies taken over by Financial Supervisory Commission. It raised the importance of strengthening the solvency supervisory mechanism of life insurance company, especially the investment property supervisory. According to Insurance Act, life insurance company investing in investment property ratio could up to 30%. However, if life insurance company over-concentrate on investment property, they may become insolvency when the property value decreases deeply. The study concluded that stressing on the investment property supervisory mechanism is needed also.