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Go-ahead given for Taikang bond sales

Taikang Life Insurance Co has been given the go-ahead to issue 3 billion yuan (US$439 million) worth of subordinated bonds to shore up solvency, it said yesterday.

The Beijing-based insurer has gained approval from the China Insurance Regulatory Commission to sell the 10-year bonds.

The insurer's solvency will top 240 percent after the bond sales.

"We plan to shore up our solvency capacity through the bond sale and pave way for a sound development," the company said.

Solvency is the capital strength of a company, reflecting its ability to make payments.

The insurer's solvency was 204 percent at the end of 2008, double the regulatory minimum of 100 percent.

Insurers with low solvency are curbed from expansion, just like banks with low capital adequacy ratio are limited in growth.

The insurance regulator has ruled that companies with a solvency of less than 100 percent will be subject to the tightest supervision while insurers with a solvency of more than 150 percent are deemed as having great capital strength.

The regulator is steering the industry to focus on financial protection rather than investment.

Taikang accounts for half the investment-linked products on the market.


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