FINANCE

Chinese Insurer’s Bond Default Shatters Implicit Guarantee Illusion

Published: Nov. 19, 2025 5:22 p.m. GMT+8

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Tianan Property Insurance Co. Ltd. of China’s recent “default” on a 5.3 billion yuan ($746 million) capital supplementary bond (CSB) — the first such failure in the country’s insurance industry — has shattered a long-held assumption that insurers’ bonds have implicit guarantees.

The company, a former affiliate of the now-dismantled Tomorrow Holding Co. Ltd., said on Sept. 30 that it could not repay the principal or interest on the 10-year bond, which matured the same day.

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Tianan Property Insurance Co. Ltd. failed to repay a 5.3 billion yuan ($746 million) bond, marking China’s first insurer bond default.
The nonpayment undermines the belief of implicit guarantees for insurers’ bonds and signals possible market-based risk pricing ahead.
Short-term market impact is expected to be limited, as these bonds are mainly held by insurers themselves.

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Who’s Who

Tianan Property Insurance Co. Ltd.: Tianan Property Insurance Co. Ltd. recently defaulted on a 5.3 billion yuan ($746 million) capital supplementary bond, marking the first such failure in China's insurance industry. The company, a former affiliate of Tomorrow Holding Co. Ltd., couldn't repay the bond as its solvency adequacy ratio fell below the regulatory minimum. This incident has challenged the assumption of implicit guarantees in the financial markets and may lead to market-based risk pricing for insurance bonds.

Tomorrow Holding Co. Ltd.: Tomorrow Holding Co. Ltd. (明天控股有限公司) is mentioned as a former affiliate of Tianan Property Insurance Co. Ltd. Tianan's recent "default" on a capital supplementary bond is highlighted as the first such failure in China's insurance industry.

Guosen Securities Co. Ltd.: Guosen Securities Co. Ltd. analysts noted that the Tianan case of nonpayment on a capital supplementary bond marks the "broken record of zero bond defaults" in the insurance sector. They also highlighted that this incident signals a further decline in the long-standing expectation of implicit guarantees within China's financial markets.

Founder Securities Co. Ltd.: Analysts at Founder Securities Co. Ltd. believe the Tianan case could usher in market-based risk pricing for insurance bonds. They also outlined two potential outcomes for the defaulted bond: a debt restructuring with extended repayment or a complete write-off.

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What Happened When

Sept. 30, 2025：: Tianan Property Insurance Co. Ltd. announced it could not repay the principal or interest on its 10-year capital supplementary bond, which matured the same day.

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