(Yicai) Feb. 26 -- Chinese insurance firms have been actively raising capital in the first months of this year to bolster their solvency and comply with regulatory requirements.

At least 13 insurers have completed or announced plans for bond or share sales so far this year, seeking to raise CNY28.4 billion (USD3.9 billion), according to their public disclosures. Several have put forward the same rationale: the funds raised will be used to supplement capital, enhance solvency, and support the issuer’s business growth.

The announcements indicate that these funding efforts are expected to much improve their solvency adequacy ratios, with the anticipated increases ranging from 7 percentage points to 30 points.

Under current regulations, Chinese insurers must maintain a minimum core solvency adequacy ratio of 50 percent and a comprehensive solvency adequacy ratio of 100 percent. Since 2023, they have stepped up their financing efforts to meet the rules, with the amount topping CNY100 billion (USD13.8 billion) for the first time that year, and hitting over CNY140 billion last year.

Life insurers facing core solvency pressures may need to quicken the pace debt issuance to replenish core capital, said Chen Fu, chief non-banking analyst at GF Securities. Recently introduced regulatory policies also aim to "expand debt-based capital replenishment tools," which could widen insurers' financing options and ease solvency pressures, Chen added.

But industry insiders caution that relying solely on external funding sources, such as bond sales or shareholder capital injections, cannot fundamentally help insurance companies improve their solvency. In the long run, they must actively make internal improvements to strengthen their operational capabilities, the people said.

The key lies in improving their solvency through internal measures such as corporate governance, risk management, and adjustments in business structure, AVIC Securities noted in a recent research report. For instance, optimizing operations across business segments can boost efficiency and profitability, while adjustments in asset allocation strategies are necessary to mitigate the risks posed by falling interest rates, the report added.

Editors: Tang Shihua, Emmi Laine