BEIJING, Aug. 15 (Xinhua) -- China Banking and Insurance Regulatory Commission (CBIRC) and the People's Bank of China (PBOC) released on August 12 a directive to encourage insurance companies to issue capital-boosting bonds of no fixed terms, effective as of September 9 this year, reported Xinhua Finance recently.
As the joint circular says, the move targets further expanding the capital supplementing channels of insurers and improving their core solvency, also helpful to increase insurers' risk resilience and capability to serve the real economy.
Capital-boosting bonds with no fixed terms here refer to bonds to be issued by insurance companies that have no fixed terms but contain write-down or share conversion clauses and can absorb losses to meet regulatory requirements for solvency under both going concern and bankruptcy liquidation situations.
However, insurance groups or insurance group holding companies are restricted from issuing the capital-boosting bonds with no fixed terms.
In future, the two Chinese regulators said to press ahead with issuance of the capital-boosting bonds of no fixed terms by insurers. By reinforcing requirements on information disclosure, they will continue to strengthen supervision over insurers and help them optimize their ability to better guard against financial risks and serve the real economy. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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