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Taikang wins solvency bond approval

TAIKANG Life Insurance has got the regulatory go-ahead to issue 3-billion-yuan (US$439 million) in subordinated bonds to shore up solvency, the insurer said today.

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 capital is raised.

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

The insurer's solvency, or the capital strength reflecting its payment ability, sat at 204 percent at the end of 2008, double the regulatory minimum 100 percent.

The company's assets returns topped 7.4 billion yuan in 2008 with a return of 8.06 percent, the highest in the industry.

Insurers with low solvency rates are restricted from expanding, just as banks with low capital adequacy ratios are limited in growth.

The top insurance regulator has introduced new regulations. Companies with a solvency of less than 100 percent will have to undergo the tightest supervision while insurers with a solvency of more than 150 percent will be deemed to have capital strength.

The regulator is guiding the industry to return to a focus on financial protection rather than being investment-driven. In the drive, insurers are shifting focus from investment-linked products to traditional protection insurances.

The company, which accounted for half of the investment-linked products in the market, is following the trend.

Traditional insurance policies have a higher solvency requirement.


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