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

Reporter: Yang Xiaohan

On March 24, China Post Life Insurance Co., Ltd. (referred to as “China Post Life”) issued the “China Post Life Insurance Co., Ltd. 2026 Perpetual Capital Bonds” (referred to as “26 China Post Life Perpetual Bond 01”) with a planned issuance scale of 1.2 billion yuan.

The “26 China Post Life Perpetual Bond 01” set a call option for the issuer. After exercising the call option, if the issuer’s comprehensive solvency adequacy ratio is not less than 100%, and after filing with the relevant regulatory authorities, the issuer has the right to fully or partially redeem the bonds at face value on each interest payment date (including the interest payment date after 5 years from the issuance date) starting from 5 years after the issuance date. After negotiation between the issuer and the lead underwriter, the subscription range for the coupon rate of this perpetual bond has been determined to be 2.10%—2.70%.

In response, Zhou Jin, a partner at Tianzhi International Financial Consulting, told the Securities Daily that setting a redemption option at the time of bond issuance is beneficial for the issuer to adopt relevant strategies based on its financial needs and changes in market interest rates, with the aim of reducing financing costs while ensuring the effectiveness of capital replenishment. Through “redeeming old bonds and issuing new ones,” insurance companies can lower the coupon rate of bonds, reduce financing costs, ease financial burdens, and optimize performance.

From the situation within the year, as of March 24, seven insurance companies, including China Merchants Renhe Life Insurance Co., Ltd. and China United Property Insurance Co., Ltd., have issued bonds for capital replenishment, with a total planned issuance scale of 16.5 billion yuan.

Currently, issuing bonds has become one of the main methods for insurance companies to replenish capital, mainly including two categories: capital replenishment bonds and perpetual bonds. Among them, perpetual bonds, which are capital bonds without a fixed term, do not have a fixed duration, contain write-down or conversion clauses, can absorb losses in both ongoing operations and bankruptcy liquidation situations, and meet solvency regulatory requirements. In August 2022, regulators released relevant policies allowing eligible insurance companies 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 companies reached 55.8 billion yuan, accounting for more than half of the total scale of related bonds issued that year.

Shi Xiaoshan from the Research and Development Department of China Chengxin Securities Rating Co., Ltd. stated 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, which can enhance the core solvency ratio and comprehensive solvency ratio, respectively.

Zhang Lin, chief macro researcher at Far East Credit Rating Co., Ltd., remarked that capital replenishment bonds and perpetual bonds are important tools for insurance institutions to supplement capital and enhance their ability to resist interest rate risks. The low-interest-rate environment has led to a general decline in the expected returns of various assets, putting pressure on insurance institutions in terms of fund allocation, duration management, and risk management, leading to a narrowing of the asset-liability spread and driving up the capital replenishment needs of some small and medium-sized insurance institutions. Meanwhile, the full implementation of the second phase of the solvency regulatory framework has further strengthened the capital replenishment needs of insurance institutions.

Regarding the future trends and changes in capital replenishment for insurance companies, Long Ge, deputy director of the Innovation and Risk Management Research Center at the University of International Business and Economics, told the Securities Daily that it is expected that the capital replenishment of insurance companies will tend to be diversified and normalized in the future. Insurance companies will widely use tools such as capital increases, issuing shares, and issuing bonds to cope with business expansion, risk prevention, and solvency requirements. At the same time, insurance companies also need to balance capital replenishment with long-term strategies, supporting sound operations and industry transformation through structural optimization.

(Editor: Qian Xiaorui)

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