The capital pressure of some small and medium-sized insurance companies is continuing to be exposed.
Recently, Guohua Life announced that it has decided to give up exercising the redemption option for &#34;20 Guohua Life 01&#34;.
The announcement shows that this capital supplementary bond issued in 2020 has a total issuance amount of 3 billion yuan, with the interest payment date for this year being December 17, and the bond interest rate being 5.5%;
At the crossroads of approaching five years since issuance, Guohua Life announced the abandonment of redemption, and the interest rate on the unredeemed portion of the bonds (for floating rate bonds, the spread on the unredeemed portion) will further increase to 6.5%. Investors will receive interest at the established rate, while the principal of the bonds will continue to exist.
Xinfeng statistics found that since the beginning of this year, there have been quite a few insurance companies whose capital supplementary bonds have matured, but even though there is still a &#34;blood replenishment&#34; demand in operations, most companies prefer to choose &#34;redeem old and issue new&#34;:
On one hand, current market interest rates are at a low level, with the interest rates for newly issued capital supplementary bonds and perpetual bonds in 2025 generally ranging from 2.15% to 2.8%, far lower than the 4-5.5% around 2020. Through replacement, interest expenses can be significantly reduced;
On the other hand, the maturity of the 2020 bonds is approaching five years, and the pressure from interest will further expand after the interest rate rises.
According to incomplete statistics, nearly 20 insurance companies have chosen to redeem capital supplementary bonds this year, including Ping An Life, Yingda Taihe Life, and China Merchants Renhe Life, all of which have chosen to reduce financing costs through &#34;redeem old and issue new&#34;.
The reason for Guohua Life's abandonment of redemption may be that its solvency pressure is greater than that of the aforementioned companies:
According to the provisions of the fundraising prospectus, Guohua Life's redemption of bonds must be based on the premise that &#34;the solvency adequacy ratio after exercising the redemption right is not less than 100% and has been filed with the regulatory authority.&#34; Moreover, if an insurance company wants to issue new bonds, there are also restrictions related to net assets, solvency, compliance records, and other factors for regulatory approval.
In this context, Guohua Life's choice of &#34;not redeeming&#34; may reflect its difficulties in capital supplementation and solvency.
In September of this year, Guohua Life's controlling shareholder, Tianmao Group, has been delisted from the A-share market due to &#34;the company plans to adjust its business structure and faces significant uncertainties&#34;;
Before delisting, it was subjected to delisting risk warnings for failing to disclose the 2024 annual report in a timely manner, and 99% of the company's revenue comes from Guohua Life.
Xinfeng has made multiple attempts and found that the solvency report disclosed on Guohua Life's official website can no longer be opened.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1433d45a-c7f4-46dc-8c01-0e501b0f1020.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1433d45a-c7f4-46dc-8c01-0e501b0f1020.png"/>
The company previously disclosed that in the first three quarters of 2024, it recorded insurance business income of 30.614 billion yuan and a net loss of 705 million yuan, with core and comprehensive solvency adequacy ratios of 84.78% and 122.75%, respectively.
It is worth mentioning that Guohua Life's &#34;non-redemption&#34; is not an isolated case; previously, Baijun Life, Zhujiang Life, and other companies also announced in 2024 that they would not exercise the redemption rights for capital supplementary bonds;
Moreover, the aforementioned two companies have also not updated their solvency reports for several consecutive quarters

The capital pressure of some small and medium-sized insurance companies is continuing to be exposed. Recently, Guohua Life announced that it has decided to give up exercising the redemption of "20 Guohua Life 01"

Guohua Life Insurance announced "no redemption": has not updated solvency report for four consecutive quarters