All insurance companies and insurance asset management companies:
In order to strengthen the credit risk management of bond investment, establish the internal credit rating system of insurance institutions, and standardize the credit rating procedures and methods, I will formulate the Guidelines for Credit Rating of Bond Investment of Insurance Institutions (for Trial Implementation) (hereinafter referred to as the Guidelines). It is hereby printed and distributed to you, and the relevant requirements are notified as follows:
First, the company should attach great importance to credit risk management and establish and improve the internal credit rating system in accordance with the relevant requirements of the Guidelines.
Two. Companies should strictly implement the credit rating system and standardize operating procedures. China CIRC will inspect the construction and implementation of the credit rating system of various insurance institutions.
Third, the company should strengthen the research on credit risk, and effectively prevent credit risk through credit rating, continuous follow-up analysis and evaluation.
Please observe it carefully.
Attachment: Guidelines for Credit Rating of Bond Investment of Insurance Institutions (Trial)
Press release issued on 8 January 2007
Guidelines for Credit Rating of Bond Investment of Insurance Institutions (for Trial Implementation) Article 1 These Guidelines are formulated in accordance with relevant laws and regulations in order to strengthen the credit risk management of bond investment, establish an internal credit rating system of insurance institutions (hereinafter referred to as the credit rating system) and standardize the rating procedures and methods.
Article 2 Insurance institutions shall conduct internal credit rating when investing in various bonds (hereinafter referred to as credit rating). Treasury bonds, central bank bills and other bonds recognized by the CIRC may be exempted from credit rating.
Article 3 Credit rating includes issuer credit rating and bond credit rating.
Article 4 An insurance institution shall, according to the company's development strategy, set up a special department or post, be equipped with professional managers, learn from the systems and procedures of external credit rating agencies, establish a credit evaluation model, and improve the credit rating system.
Article 5 The China CIRC shall conduct classified supervision according to the construction and operation of the credit rating system of insurance institutions. Article 6 Credit rating shall follow the following principles:
(1) principle of authenticity and consistency. Rating personnel shall verify the authenticity of rating data and materials, and ensure the consistency of basic data, index caliber, rating methods and evaluation standards;
(2) the principle of independence and objectivity. Rating personnel shall be independent, objective and impartial, and shall not be adversely affected by issuers and other external factors;
(3) Prudence and prudence principle. Rating personnel should fully consider the possible fluctuations in macro-economy, specific industries and the operation and management of bond issuers, and comprehensively and prudently evaluate the operation and financial status of bond issuers, the risk-return status of bonds and other risks.
Article 7 An insurance institution shall establish and improve a credit rating management system and report it to the China Insurance Regulatory Commission for the record. The credit rating management system mainly includes:
(1) Rules of procedure and credit rating procedures;
(2) Detailed rules for credit rating methods.
(3) Guidelines for credit rating reports.
(4) Operating specifications for rating personnel;
(5) Due diligence system;
(6) Tracking rating and re-evaluation system;
(seven) firewall system and other systems to avoid conflicts of interest;
(8) Other systems.
Article 8 The credit rating department shall be composed of at least two professionals. Credit rating professionals should have financial knowledge and financial analysis ability, and the person in charge should have relevant work experience.
Article 9 A credit rating department or post shall define its responsibilities and avoid business overlapping with other departments. Credit rating personnel shall not engage in investment transactions at the same time.
Article 10 The credit rating shall adopt the rating definition and symbol system commonly used at home and abroad. In principle, it is divided into three levels: investment level, speculation level and default level, and each level is divided into several levels.
Article 11 Credit rating departments or posts shall standardize the management and use of rating information, gradually improve the rating information database, and continuously accumulate information and data such as default events, default rate, default recovery rate and credit stability, and keep them as management resources for a long time.
Article 12 A credit rating department or post shall establish a file management system to sort out relevant original materials, rating materials and credit rating reports.
Article 13 The basic process of credit rating includes information collection, investigation and interview, preliminary evaluation, report submission and follow-up rating.
Article 14 Insurance institutions shall make full use of media information and other public materials, and extensively accumulate all kinds of data as the basic information of credit rating.
Article 15 An insurance institution shall actively communicate with the issuer to learn about its business operations, financial plans, management policies and other conditions that affect its credit rating. When necessary, relevant information can be obtained through field investigation.
Sixteenth credit rating personnel should strictly review the information obtained to ensure that the information is true and accurate. If the information is incomplete or there are false statements, the insurance institution shall not rate it.
Article 17 Credit rating personnel shall use scientific and reasonable rating methods to analyze and study the rating objects, write a credit rating report, preliminarily evaluate the credit rating, and form a credit rating result after examination and approval according to the prescribed procedures, which will serve as an important basis for bond investment and risk management.
Article 18 The credit rating report shall be reported step by step and submitted to relevant departments for use in time. The Risk Management Department shall supervise the use of credit rating results.
Article 19 An insurance institution shall track the rating changes of bonds during their existence. Follow-up rating shall be conducted at least twice a year, and the frequency of follow-up rating shall be appropriately increased for issuers with low credit ratings.
If the issuer has the problem of capital chain interruption and needs to issue bonds repeatedly or many times, or the issuer, guarantor and collateral have major changes, the insurance institution shall re-evaluate the credit rating of the issuer and bonds in time.
Article 20 An insurance institution shall strengthen the research on the bond market, analyze the credit rating, bond price and other related factors, and report to the regulatory authorities in time if any abnormal situation is found.
Article 21 An insurance institution shall establish a scientific index system, standardize rating procedures and methods, analyze in detail the risk factors that affect the credit rating of bond issuers, evaluate their solvency and willingness to pay debts, and determine their credit rating.
Twenty-second solvency assessment includes individual assessment and supporting assessment.
The single evaluation mainly analyzes the issuer's external environment, operating factors, internal risk management and financial strength.
Support evaluation mainly analyzes the issuer's position in macro-economy and shareholder units, shareholder structure and government support, and evaluates the ability of the assessed object to obtain external support when it needs funds.
If the issuer's legal person institution is located in other countries or regions, the sovereign risk of the country or region where it is located shall be analyzed.
Article 23 When evaluating the willingness to repay debts, bond issuers should focus on the following factors:
(a) credit records, mainly to check the issuer's historical default records;
(2) Corporate governance, which mainly examines the background and composition of shareholders, the establishment and performance of shareholders' general meeting, board of directors and board of supervisors, management's decision-making and implementation, related party transactions and performance supervision, incentive and restraint mechanism, etc.
(3) The quality and management status of the issuer, mainly examining the quality of the legal representative, the quality of the staff and the management level;
(4) Other factors.
Article 24 Insurance institutions shall review the financial management policies of bond issuers, analyze their overall development goals and capital requirements, and evaluate their rationality in combination with historical records and business development.
Article 25 An insurance institution shall establish a general financial status evaluation index system and a special financial index system according to the characteristics of different industries.
Article 26 An insurance institution shall, in accordance with the principle of comparability and according to the financial characteristics and risk status of different industries, establish and adjust the financial evaluation benchmarks of related industries to accurately reflect the financial status of bond issuers.
Twenty-seventh bond issuers are general industrial and commercial enterprises, and should focus on their business risks and financial risks. If the issuer is a commercial bank, it should focus on the external environment, operating factors, internal management risks and financial strength that affect its credit. (See Annex for the main evaluation methods of general industrial and commercial enterprises and commercial banks)
Article 28 An insurance institution shall, according to the issuer's credit status and in combination with the characteristics of bonds and related contracts, examine the debtor's credit degree of debt repayment and determine its credit rating.
Article 29 When evaluating bonds and related contracts, the investment of funds raised by bond issuers, project cash flow and comprehensive cash flow, debt repayment ability at maturity, and repayment timeliness shall be evaluated. An investigation should be conducted, focusing on the factors related to the flow and income of bond funds.
Article 30 When determining the credit rating of bonds, insurance institutions should focus on the settlement order of bonds.
(1) Guaranteed bonds: including credit enhancement conditions such as mortgage, pledge and credit guarantee. The repayment order of principal and interest takes precedence over ordinary bonds, and its credit rating may be higher than that of the issuer.
(2) Ordinary bonds: without any credit enhancement conditions, the repayment order of principal and interest is superior to subordinated bonds and mixed capital, and the credit rating is generally equivalent to that of issuers.
(3) Subordinated bonds: the repayment order of principal and interest is listed after the company's ordinary debt, superior to mixed capital and equity capital, and the credit rating is generally lower than that of the issuer.
(4) Hybrid securities: When certain conditions are met, the principal and interest can be postponed, the repayment order is higher than equity capital, and its credit rating is generally lower than that of the issuer and lower than that of subordinated bonds.
Article 31 Where a third-party institution provides all or part of the debt guarantee for the issuer, the credit rating of the bond can be at most equivalent to that of the guarantor.
Article 32 Where a bond contains credit enhancement conditions such as mortgage, pledge and credit guarantee, the market value, liquidity and mortgage-pledge ratio of the collateral shall be evaluated, and the credit status, commitment conditions and repayment timeliness of the guarantor shall be evaluated.
Article 33 An insurance institution shall, according to the principle of prudence, set certain restrictions on the role of credit enhancement and control the credit rating of credit-enhanced bonds.
Article 34 When investing in corporate bonds and convertible corporate bonds, insurance institutions should focus on whether a specific bond is guaranteed, the legal effect of the guarantee, the guarantee conditions, irreversibility and the financial strength of the guarantor according to the issuer's credit rating.
Article 35 When investing in short-term financing bonds, an insurance institution shall, according to the issuer's credit rating, focus on analyzing the influence of industry trends, cash flow and asset liquidity during the issuance period on the current bonds, as well as the issuer's willingness, manner and ability to take financing measures to repay debts in case of crisis.
(1) Analysis of the trend of short-term financing bonds during the issuance period, focusing on recent industry changes, the issuer's recent product structure adjustment, new projects put into production, construction in progress and other factors, and analyzing the impact of recent changes in the issuer's equity, organizational structure, management mode, senior executives, asset mergers and acquisitions and sales on its operations.
(two) cash flow analysis, focusing on the issuer's cash flow forecast basis in the next +0 to 2 years; According to the income, cost change and investment and financing plan in the next two years, predict the cash flow in the next 1 to 2 years; Analyze the sensitivity of the issuer to the cash flow of economic activities in the next 1 to 2 years under the unfavorable economic environment.
(3) Asset liquidity analysis, focusing on the issuer's asset structure, current asset institutions, asset turnover and liquidity of assets such as accounts receivable and inventory.
Article 36 When writing a credit rating report, rating personnel shall include rating analysis and rating conclusion.
Article 37 The rating analysis shall briefly explain the evaluation process and influencing factors of this rating. It mainly includes the impact of the issuer's basic situation, industry, governance structure, business analysis, capital strength, financial situation, risk factors, investment of raised funds, debt repayment guarantee ability, anti-risk ability, external credit enhancement measures of the issuer, bond contract terms, potential support from third parties, bond yield or risk premium, etc. About credit rating.
Article 38 The rating conclusion shall specify the definition of credit rating, the main basis of rating conclusion, the credit rating of the issuer or bond, and briefly explain the risk degree of the rating object.
Article 39 The credit tracking rating report shall be consistent with the previous rating report, focusing on the following contents:
(a) the main changes in the basis for determining the bond issuer and credit rating, and the impact on the credit status of the assessed object;
(2) Re-determining the credit ratings of issuers and bonds.
Fortieth credit rating and tracking rating reports shall indicate the reporting date.
Article 41 Insurance institutions shall, with reference to these Guidelines, formulate credit rating systems, procedures and methods for other bond issuers and debt investment instruments, and report them to the China Insurance Regulatory Commission for the record.
Article 42 The China Insurance Regulatory Commission shall be responsible for the interpretation of these Guidelines and shall come into force as of the date of promulgation.