PING AN OF CHINA(HK:02318) Jin Rong Shi Bao·2025-12-18 08:43Core Viewpoint - The insurance industry is increasingly utilizing capital supplement tools, with significant bond issuances observed in 2023, indicating a trend towards optimizing financing structures to enhance solvency and support business development [1][2][3]. Group 1: Capital Supplement Bonds Issuance - Ping An Life successfully issued 20 billion yuan in 10-year redeemable capital supplement bonds, while Dongwu Life issued 3 billion yuan in capital supplement bonds [1]. - As of December 17, 2023, the total amount of capital supplement bonds and perpetual bonds issued or approved for issuance in the insurance sector reached 102.87 billion yuan [1]. - A total of 13 insurance companies have issued perpetual bonds amounting to 52.97 billion yuan this year, with interest rates ranging from 2.2% to 2.95% [2]. Group 2: Purpose and Impact of Perpetual Bonds - Perpetual bonds are designed to meet solvency regulatory requirements and can absorb losses during ongoing operations or bankruptcy [2]. - The implementation of stricter core capital recognition standards since the introduction of the "Solvency II" Phase II rules has led to a general decline in the solvency of the industry, making perpetual bonds a crucial tool for enhancing capital adequacy [2]. - The extension of the transition period for the "Solvency II" Phase II rules until the end of 2025 is expected to lead to more insurance companies issuing bonds to alleviate capital pressure [2]. Group 3: Capital Supplement Bonds Overview - In addition to perpetual bonds, capital supplement bonds have also become a significant means for insurance companies to enhance their capital [3]. - As of December 17, 2023, 13 insurance companies issued capital supplement bonds totaling 49.9 billion yuan, with interest rates between 2.15% and 2.8% [3]. - Ping An Life's issuance of 20 billion yuan in capital supplement bonds is the largest single issuance this year, aimed at improving solvency and supporting stable business growth [3]. Group 4: Financing Structure Optimization - The choice of capital supplement tools by insurance companies is influenced by the nature and purpose of the capital, with capital supplement bonds primarily used for supplementary capital and meeting solvency requirements [4]. - Perpetual bonds, while alleviating repayment pressure due to their lack of a fixed maturity date, typically come with higher interest rates, increasing financial costs [4]. - The trend of optimizing capital structures through the issuance of both perpetual bonds and capital supplement bonds is expected to continue, driven by regulatory policies and market conditions [4].