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

Yang Xiaohan, a reporter from this paper

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

This issuance of “26 Postal Savings Life Perpetual Bond 01” by Postal Savings Life sets the issuer’s call option. If, after exercising the redemption right, the issuer’s comprehensive solvency adequacy ratio is not less than 100%, and after filing with the relevant regulatory authorities, the issuer, starting from 5 years after the issuance date, has the right on each interest payment date (including the interest payment date 5 years after the issuance date) to redeem all or part of the bonds at par value. After consultation between the issuer and the lead underwriter, the subscription price range for the coupon rate of this perpetual bond has been set at 2.10%—2.70%.

In this regard, Zhou Jin, a partner in Tianzhi International Financial Industry Consulting, told Securities Daily reporters that setting a redemption option at the time of bond issuance is beneficial for the issuer to 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 coupon rate of the bonds, reduce financing costs, ease financial burden, and improve performance.

Looking at the situation within the year, as of March 24, there have been seven insurance firms, including China Merchants Renhe Life Insurance Co., Ltd. and China United Property & Casualty Insurance Co., Ltd., among others, that have issued bonds for capital replenishment, with a combined planned issuance size of RMB 16.5 billion.

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 are perpetual capital bonds with no fixed maturity. These bonds have no fixed maturity, include write-down or conversion clauses, and can absorb losses and meet solvency regulatory requirements both in a continuous operating state and in a bankruptcy liquidation state. In August 2022, the regulatory authorities released relevant policies allowing qualifying 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 size of perpetual bonds by insurance firms reached RMB 55.8 billion, accounting for more than half of the total size of related bonds issued that year.

Shi Xiaoshan, from the Research and Development Department of CICC Pengyuan, said that for insurance companies, perpetual bonds can be included in core tier-two capital, while traditional capital replenishment bonds can be included in supplementary tier-one capital, respectively helping improve 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 for insurance institutions to replenish capital and enhance their ability to withstand interest rate risk. In a low-interest-rate environment, expected yields of various assets generally decline, creating certain pressure on insurance institutions’ capital allocation, duration management, and risk management, narrowing the asset-liability interest rate spread and boosting some smaller and mid-sized insurance institutions’ demand for capital replenishment. Meanwhile, the full implementation of the Phase II project of C-ROSS further strengthens insurance institutions’ demand for capital replenishment.

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

(Editor: Qian Xiaorui)

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