Seven insurance companies plan to issue bonds totaling over 16 billion yuan within the year

By Yang Xiaohan, a reporter for this newspaper

On March 24, Postal Savings Life Insurance Co., Ltd. (abbreviated as “Postal Savings Life Insurance”) issued the “Postal Savings Life Insurance Co., Ltd. 2026 Perpetual Capital Bonds with No Fixed Maturity” (abbreviated as “26 Postal Savings Life Insurance Perpetual Bond 01”). The planned issuance size was 1.2 billion yuan.

The “26 Postal Savings Life Insurance Perpetual Bond 01” issued by Postal Savings Life Insurance this time includes a call option for the issuer’s early redemption. After exercising the redemption right, if the issuer’s comprehensive solvency adequacy ratio is no less than 100%, then upon filing with the relevant regulatory authorities, the issuer, starting from 5 years after the issuance date, will have the right on each interest payment date (including the interest payment date falling on the 5th year after the issuance date) to redeem all or part of the bonds at par value. After consultation and determination between the issuer and the lead underwriter, the subscription price interval for the coupon rate of the perpetual bonds for this issuance is 2.10%—2.70%.

In this regard, Zhou Jin, a partner at Tianzhi International Finance Industry Consulting, told Securities Daily that setting a redemption option at the time of bond issuance helps the issuer adopt relevant response strategies based on its own financial needs and changes in market interest rates. The purpose is, on the premise of ensuring that the capital replenishment effect is achieved, to reduce financing costs. Through “redeeming old bonds and issuing new ones,” insurance companies can lower the bond coupon rate, reduce financing costs, ease the financial burden, and optimize performance.

Judging from the situation within the year, as of March 24, a total of seven insurance firms, including China Merchants Renhe Life Insurance Co., Ltd. and China United Property & Casualty Insurance Co., Ltd., had issued bonds to replenish capital, with a combined planned issuance size of 16.5 billion yuan.

At present, issuing bonds has become one of the main ways for insurance firms to replenish capital. It mainly includes two categories: capital replenishment bonds and perpetual bonds. Among them, perpetual bonds, i.e., perpetual capital bonds with no fixed maturity, have no fixed term, include write-down or conversion-to-shares clauses, and can absorb losses and meet solvency regulatory requirements in both ongoing operations and bankruptcy liquidation conditions. In August 2022, the regulatory authorities released related policies allowing insurance companies that meet the conditions to issue perpetual bonds. Since then, perpetual bonds have become one of the commonly used tools for insurance companies to replenish capital. In 2025, the total issuance scale of perpetual bonds by insurance firms was 55.8 billion yuan, accounting for more than half of the total scale of related bonds issued that year.

Shi Xiaoshan of the Research and Development Department of China Securities Credit Rating Co., Ltd. (CniX) said that for insurance companies, perpetual bonds can be included in core Tier 2 capital, while traditional capital replenishment bonds can be included in supplementary Tier 1 capital, thereby respectively improving the core solvency ratio and the comprehensive solvency ratio.

Zhang Lin, Chief Macroeconomic Researcher at Far East Credit Assessment Co., Ltd., said that capital replenishment bonds and perpetual bonds are important tools currently for insurance institutions to replenish capital and improve their ability to withstand interest-rate risk. The low-interest-rate environment has caused the expected returns of various assets to generally decline, putting some pressure on insurance institutions in terms of capital allocation, duration management, and risk management. The net interest margin between assets and liabilities has narrowed, increasing the capital replenishment needs of some mid-sized and small insurance institutions. At the same time, the full implementation of the second phase of Solvency II further strengthens insurance institutions’ capital replenishment needs.

Regarding future trends and changes in capital replenishment by insurance firms, Long Ge, Deputy Director of the Innovation and Risk Management Research Center of the University of International Business and Economics, told Securities Daily that it is expected that, going forward, the capital replenishment by insurance firms will become more diversified and more normalized. Insurance firms will widely use tools such as capital increases, issuing shares, and issuing bonds to respond to business expansion, risk prevention and control, and solvency requirements. At the same time, insurance firms also need to balance capital replenishment with long-term strategy, supporting steady operations and industry transformation by optimizing their structure.

(Editor: Qian Xiaorui)

Keywords: