BEIJING, March 15 (Xinhua) – Four Chinese insurance companies have been approved to issue 10-year callable capital supplementation bonds on the country’s interbank bond market, reported Shanghai Securities News on Friday.
The four insurers, namely China Life Insurance Co., Ltd. (601628.SH), Ping An Property & Casualty Insurance Company of China, Ltd., Pearl River life insurance co., ltd. and Aeon Life Insurance Co., Ltd. were permitted to sell at maximum 35 billion yuan, 10 billion yuan, 3.5 billion yuan and two billion yuan of bonds of the kind respectively.
In recent years, capital supplementation bond has been a new tool for Chinese insurance firms to enhance their capital in light of their relatively low financing costs, high liquidity and flexibility in trading.
However, threshold for insurers to issue such bonds is set higher than others’. As a relevant regulatory document requires, insurers qualified to issue capital supplementation bonds shall operate for more than three years without significant illegal activities in recent three years, and their net assets by the end of the latest quarter and the previous year shall be no less than one billion yuan with solvency ratio not lower than 100 percent.
Generally, capital supplementation bonds here refer to bonds with durations at five years or beyond issued by insurers in China to supplement their capital and their liquidation lies ahead of insurers’ equity capital but after their policy compensation obligations and other general liabilities.
According to the China banking and insurance regulator, the four insurers are required to issue the above-mentioned bonds in the following six months. Enditem (Edited by Duan Jing, duanjing@xinhua.org)