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The Research on IPO Pricing Method of Life Insurance Company Based on Embedded Value

Author: HuangJingZuo
Tutor: ZhuoZhi
School: Southwestern University of Finance and Economics
Course: Insurance
Keywords: Embedded Value Life insurance companies IPO pricing
CLC: F842.3;F832.51
Type: Master's thesis
Year: 2009
Downloads: 166
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Abstract

With 2007 China Life Insurance Company Limited, China Ping An Insurance (Group) Co., Ltd. and China Pacific Insurance (Group) Co., Ltd. has successfully landed an A-share market, insurance companies 2 pioneered financial sector domestic and foreign market of its kind, theoretical discussion also become one of the hot. Life insurance companies listed in the study of the problem, how to determine a reasonable life insurance company IPO price to become a problem. The traditional price-earnings ratio method may underestimate the true value of the company, and the use of the intrinsic value method to determine the IPO price of life insurance companies and generally make life difficult for investors to understand. According to the SFC \financial or insurance company should disclose the relevant business group embedded value information, while companies hire external actuary or actuary. Also according to the relevant provisions of China Insurance Regulatory Commission, the preparation of embedded value reporting, and as a prospectus reference documents. This shows that the intrinsic value of life insurance companies be able to determine a reasonable share IPO price to play an important role. Embedded value life insurance company (Embedded Value, EV), including adjusted net assets (The adjusted net assets) and effective business value (The value of business in force) two factors. Embedded value assessment for effective business profits include the entire policy period, the full account of the characteristics of long-term insurance business; embedded value profit of the way they have a \profits policyholders during the entire balance of allocation. Embedded value life insurance company so unique to a financial reporting tool and value measurement tool. In other countries, the intrinsic value is the value of life insurance companies the main part of the true value of a company is more objective and scientific description of the Company's embedded value accurately assess accurately assess the value of the company is based. Embedded value plus the valuation date assessment value of future new business to get the company's assessed value, appraised value of the life insurance company that is a reasonable estimate of the economic value. Embedded value life insurance companies can be considered Valuation introduction of the \\Intrinsic value in nature on the continuation of the concept of economic value in the calculation of actuarial assumptions introduced, is a kind of technology-based life insurance actuarial industry-specific value of the company concept. Currently in foreign countries, the intrinsic value has been widely used in the management of life insurance companies in all aspects of decision-making; while in the country, has also been used in the embedded value life insurance company valuation of companies listed and IPO pricing; Chinese-funded insurance companies and foreign companies or joint stock companies co-value assessment; meet the joint venture's parent accounting requirements. Embedded value life insurance companies for China is a new thing, its application is still in the exploratory stage, the domestic relevant research literature is not much, for the intrinsic value for the further promotion in China modest contribution to the desire, this article will Embedded value life insurance company IPO pricing in the introduction, and its application in this regard rationality in-depth study. Currently on the right there is a certain intrinsic value and its application research, but the introduction of the embedded value life insurance company's IPO pricing aspects of the research is still relatively small, especially in the embedded value life insurance company IPO pricing applied to the theoretical analysis of relevant fields research is still in its infancy, this paper theoretically discusses hand drawn intrinsic value method is more appropriate to determine the price of life insurance company IPO method conclusions; hand trying to build a set of intrinsic value based on actuarial valuation methods to China's life insurance company to determine the IPO price and the intrinsic value of life insurance companies in China IPO pricing in better application recommendations accordingly, I hope this study to determine the IPO price of life insurance companies to provide assistance. The thesis consists of five chapters, the basic ideas and structured as follows: The first chapter introduces the major life insurance company valuation methods, the value of life insurance companies evaluate the various methods (including asset-based assessment methods, assessment of income present value method, comparable Law, option valuation methods, including valuation methods) were summarized and analyzed, and the applicability of each method are discussed for the next chapter of which is incorporated herein by comparing the intrinsic value of research topics to do the groundwork. The second chapter discusses the embedded value life insurance company assessment theory and practice, as well as its advantages and disadvantages of the application and calculation steps were studied. First introduced life insurance company and accounting particularity, and then through the embedded value methodology with other valuation methods comparison illustrates the embedded value life insurance company valuation applied superiority; secondly to embedded value development and defining introduced; final focus of the chapter presents a general assessment of the embedded value calculation steps and Evaluation. Chapter III of the embedded value life insurance companies in the IPO pricing in the use position. This chapter first initial public offering (IPO) pricing for the economic analysis; then discusses China IPO IPO system and its effect on the valuation of changes in demand; then 30 parts of a securities company IPO pricing report on China's life insurance company IPO Pricing valuation valuation methods commonly used in the statistical analysis, indicating that the embedded value life insurance companies in the country in the use of IPO pricing universality; final evaluation method for embedded value life insurance company IPO pricing efficiency were analyzed, obtained in our embedded value life insurance company IPO pricing in the use of rationality and feasibility of the conclusions, and the intrinsic and extrinsic factors from two aspects to investigate the effect life insurance company IPO pricing factor. Chapter IV attempts to build the intrinsic value based life insurance company IPO pricing valuation model. Discusses the embedded value life insurance company IPO pricing in absolute valuation application; then introduced the embedded value life insurance companies in the IPO pricing relative valuation application; Finally, according to this analysis applied to embedded value life insurance company IPO pricing put forward the corresponding policy recommendations. Papers logical sequence in accordance with generally commence on the content of each chapter before and after care, complementary and not only focus on theoretical research, and the application of a comparative analysis of research methods, the integrated use of finance, economics, actuarial science and statistics, and other disciplines of knowledge from the general theory of the implementation of the Chinese real solution to the problem. The innovation lies in the following papers: (1) In this paper, the characteristics of the corresponding analysis of life insurance companies, life insurance companies and embedded value and other valuation methods were compared and analyzed to derive its superiority. (2) At present, China Securities Company collected on three insurance companies IPO pricing report, the report of the assessment methods and the use of valuation conclusions for statistical analysis. (3) attempts to assess the relative value of the absolute value and build two angles to the intrinsic value-based life insurance company IPO pricing methods, and embedded value life insurance company in China IPO pricing in the application of a series of recommendations. (4) to investigate the effect of the life insurance company IPO pricing factors. Because of the knowledge and capacity constraints, the paper also inadequate. First, the paper because of the small number of publicly traded life insurance companies, the lack of empirical data, can not affect the life insurance company IPO pricing factors related to the corresponding empirical analysis. Second, the validity of the argument for the intrinsic value, due to the relatively short time to market for life insurance companies, life insurance companies could not after the listing on the stock prices dynamically considered in order to demonstrate the reasonableness of its IPO price.

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CLC: > Economic > Fiscal, monetary > Finance, banking > China's financial,banking > Financial market
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