In today's dynamic business environment, life insurance companies must focus on changes in operating performance over long time periods since capital allocation is the main economic process in an insurance company [18]. According to the going-concern concept in accounting, a business will operate continuously over long time periods. A firm operating on a continuum basis will have not only current periodic inputs and outputs but also carry-over items from one term (t) to the next term (t+1). For instance, a company will accumulate and carry forward its fixed assets from one time period to another continuously. In accounting, such items are referred to as permanent accounts [51] and [52].
Beginning with the accounting cycle, we investigate the dynamic process of a life insurer from the operational point of view. Fig. 1 depicts the dynamic production process of this study. The inputs for each term are labor and business services, debt capital, and equity capital, where both debt capital and equity capital represent the carry-over activities or permanent accounts. Incurred benefits plus additions to reserves and investment profits are the outputs for each term.