Risk of insurance company's subordinated debt

Sub-prime debt still has repayment risk. Although subordinated debt has brought stable funds to insurance companies in a certain period of time, it is still a debt in the end. Insurance companies have to pay interest in addition to repaying the principal at maturity. The main purpose of issuing subordinated debt is to enhance the solvency of insurance companies. However, the enhancement of solvency ultimately requires the improvement of the management level of insurance companies. Otherwise, when the bond matures, the capital of the insurance company will shrink. At this point, the solvency of the insurance company may appear again, and the operation of the insurance company may face a crisis.

In addition, since subordinated debt is issued in the form of directional issuance, the measures stipulate that information disclosure documents such as prospectus made by insurance companies to raise subordinated debt shall not be made public in the media or in disguised form, lacking social supervision, so the supervision task of the regulatory authorities is heavier. The regulatory authorities should promptly introduce a series of effective implementation measures and regulatory measures to monitor the whole process of bond issuance, capital utilization and repayment of insurance companies, eliminate the adverse effects in the implementation of subprime financing policies, and ensure the sustained, rapid, healthy and coordinated development of the insurance industry.