China to Allow Insurers to Issue Perpetual Bonds to Replenish Capital

China will allow insurance companies to replenish capital by selling perpetual bonds from next month, providing a new tool for the under-pressure industry to comply with higher capital requirements amid a Covid-disrupted economy.

Many insurance companies, life insurers in particular, need to boost capital as new regulations that went into effect early this year raised the bar for what constitutes core capital — the capital that an insurer has to absorb losses, even in the event of liquidation. The tightened regulations, announced in December, have significantly reduced their core-capital levels.