Enhance solvency two big insurance Baishi class debt

Recently, China Ping ' an insurance, PICC Insurance has announced the issuance of subordinated periodic debt.　　In fact, since 2008, a number of insurance companies have successfully issued subordinated debt, the industry believes that in the current economic situation, the frequent issuance of subordinated debt has become insurers, especially the insurance companies to greatly enhance the solvency of the important means. The two major insurance Baishi near the end of April, the two major insurance companies have announced the directional issue of subordinated debt. Among them, the ping ' an production risk in 2008 at the end of the group 1 billion yuan to increase capital, in recent days again issued a 2 billion yuan subordinated debt.　　In April 2008, the PICC Group issued a 7.808 billion-yuan subordinated debt, and its listed companies recently launched a 8 billion-dollar debt issuance programme, which is the third major debt of the department of Insurance in nearly 3 years. According to the regulatory requirements of the CIRC, in order to ensure that the company maintains the highest category of solvency, the board of the Ping An insurance company and the general Meeting resolution issued a 2 billion RMB subordinated debt in April 2009.　　China Ping ' an group said the successful issuance of the debt has greatly increased the solvency of the FPA and further optimized the capital structure of the insurance production. In the fourth quarter of 2008, Ping An insurance has increased by 1 billion yuan, raising the solvency adequacy rate to 153%.　　After the issuance of the debt, the solvency will be further enhanced, the purchase of the company's insurance products customers will be more effective protection. "This directed issuance will further optimize the capital structure of the company." "Ping ' An said," from the capital structure, the direct issuance of debt before, Ping ' an insurance mainly through China Ping ' an group, such as shareholder capital injection and its own profits retained to supplement the actual capital, the use of its own capital. Through the directional issuance of debt, the successful development of a new financing channel, through capital debt tamping capital strength, not only directly improve the company's solvency, and optimize the capital structure, to improve the core capital return.　　May 8, the PICC General Meeting of Shareholders approved the issuance plan of the company no more than 8 billion yuan periodic bonds by vote, the bond period is 10 years. "The board will determine the terms, date of issue, size of issue and interest rate of the subordinated debt after taking into account market conditions and all relevant factors."　　"PICC before the announcement of the disclosure. It is understood that, and the same as ping an production risk, PICC property Insurance This issue raised funds will be used to improve the company's solvency.　　It is noteworthy that in April 2008, PICC PICC's parent group issued a total amount of 7 billion yuan of 10-year callable subordinated periodic debt, due to the enthusiastic subscription, the PICC group issued a quota, the final issue of the scale reached 7.808 billion yuan.　　Industry insiders believe that the insurance companies have only one purpose to borrow, to cover the rapid growth of underwriting business caused by the solvency gap. China's Ping An 2008 annual report revealed that due to the shrinking capital markets, the solvency ratio at the end of 2008 was reduced from 181.6% in the previous year to 153.3%. PICC has been reported in 2008 yearsshows that as of June 30, 2008, PICC has lost 292 million yuan, the solvency adequacy rate of 120%, has been close to the regulatory authority of the 100% solvency adequacy requirements of the minimum. Debt issuance can also be invested through the issuance of debt, the lack of complementary solvency has become a common means of insurance companies.　　A few years ago, Taikang Life has issued a 1.3 billion-yuan secondary performance, after the Xinhua life, Taiping Life and other companies have successfully issued debt.　　Due to the economic situation and other reasons, the pace of debt issuance in 2008 is significantly accelerated, PICC Group, PICC Life insurance, and all longevity, sunshine life, etc. are joined in the ranks of the debt.　　In the industry, for those who are faced with low solvency ratios, the issue of secondary debt is undoubtedly a good way to solve the financing, but the issue of subordinated debt is not the only way to replenish capital, insurance companies, shareholders to increase the share capital, the listing of capital increase, the introduction of new shareholders, etc. are the usual ways for the insurance companies to improve their solvency. There are also insiders believe that the rapid expansion of insurance companies, through the issuance of subordinated debt to supplement the insurance company's capital, can conceal the company's poor operating conditions, lack of capital of the status quo, but can not fundamentally improve the insurance company's "hematopoietic function."　　When the bond maturity needs to be repaid, the capital of the insurance company will drop sharply, and the other problems will be exposed, which would greatly discourage the insured's confidence in the insurance company and eventually lead to the crisis of the insurance company. As insurance companies issue subordinated debt to solve the problem of solvency shortfall, many people suspect that the solvency of debt-issuing companies must be problematic.　　has been involved in the issue of subordinated debt of the public life and Sunshine Insurance has repeatedly stressed that the company issued subordinated debt raised funds mainly for investment. April 28, the CIRC approved Sunshine life insurance to raise 10-year subordinated periodic debt, the size of the collection is not more than 1 billion.　　Early this year, Sunshine Life parent company Sunshine Insurance Group was allowed to issue 10-year subordinated debt, up to 500 million yuan. And Ping An insurance, PICC, the difference is that Sunshine life solvency sufficient, do not need to increase through the issuance of debt. "As of the end of 2008, Sunshine Life has reached 842% per cent of the adequacy of its liability reserves, well above the 150% per cent required by regulators, up to 5.6 times times the highest requirements imposed by regulators," he said.　　"Sunshine Insurance Group Introduction."　　Reporter notes to increase the issuance of debt are just tactic bull sequelae like a lost tail tormented the young Chinese insurance industry, investment income of a large decline, the proportion of investment products too high, the sustained blowout of premiums, solvency shortage of great pressure, have become a difficult problem to face. The attractive investment income of bull market will induce the insurance company to put more capital into the capital market, but because of the policy limit of investment ratio, the insurance company must raise more funds to rely on the business expansion, under the cover of high income, it will not expose the risk of rising insurance costs and underwriting business losses. And the most convenient way to get the premium is the large-scale promotion of investment products,The life insurance market, the traditional life insurance products of the fresh people and the bank to win the huge intermediary fee, forcing the life insurance company to deviate from the protection-oriented waterway, to the investment-oriented products transfer.　　The profit of insurance company comes from insurance business and investment income, the loss of underwriting business will further increase the pressure of investment business, and adopt more aggressive investment strategy. After the deterioration of the capital market environment, the aggressive investment strategy will cause the insurance company huge investment loss, the capital not only has not been able to keep up with the business expansion the pace, the solvency also can reduce greatly, the insurance company can only be forced to raise the capital.　　To ensure solvency, a total of 39 insurance companies in 2008 to increase capital 42, including the first Aetna, Haikang, Haier New York Life and other three joint ventures are two times in the year to increase capital. However, the simple increase in equity, the issuance of subprime bonds, although it can greatly increase the solvency of the insurance companies, but this is only tactic. What the insurance company really wants to do is to change the extensive management, two legs walk, do well underwriting and investment coordination, so as to enhance their own hematopoietic function, long-term healthy development.