Recently, Tianan Property & Casualty Insurance Co., Ltd. (hereinafter referred to as "Tianan Property Insurance") issued an announcement stating that the company's 2015 capital supplementary bonds (hereinafter referred to as "15 Tianan Property Insurance Bonds") were due for redemption on September 30, 2025, but the bonds are expected to be unable to repay principal and interest.

The reason for the expected inability to repay principal and interest is that as of September 30, 2025, the company cannot ensure that its solvency adequacy ratio will not be lower than 100% after repaying the principal and interest of the current bonds, and that it has the ability to repay the principal and interest of other liabilities.

According to data disclosed by Tianan Property Insurance, the company has suspended disclosure of quarterly solvency reports since the second quarter of 2020. As of the end of the fourth quarter of 2019, the company's core and comprehensive solvency adequacy ratios were 185.59% and 236.99%, respectively.

The financial team at Guosen Securities Economic Research Institute believes that the Tianan Property Insurance bond default is not only an exposure of long-accumulated risks, but also reflects the trend of China's financial market breaking rigid redemption and promoting market-oriented risk pricing. As the first bond default case in the insurance industry, it will become an important part of risk education and pricing mechanism improvement in China's financial market.

Tianan Property Insurance stated in its announcement that as of September 30, 2025, the company cannot ensure that its solvency adequacy ratio will not be lower than 100% after repaying the principal and interest of the current bonds, and that it has the ability to repay the principal and interest of other liabilities. Therefore, the company cannot repay the principal and interest of the current bonds to bondholders.

The Tianan Property Insurance announcement pointed out that the company has actively communicated with bondholders of the current bonds, fully cooperating with the relevant demands of bondholders, and will make overall arrangements and handle the current bonds in the company's risk disposal work in the future.

It is reported that Tianan Property Insurance issued the "15 Tianan Property Insurance Bonds" on September 29, 2015, with an issuance scale of 5.3 billion yuan and a term of 10 years. The coupon rate adopts a segmented interest calculation method, with a coupon rate of 5.97% for the first 5 years. If the issuer does not exercise the redemption right at the end of the 5th year, the coupon rate for the latter 5 years will be the original coupon rate of the first 5 interest years plus 100 basis points (1%), which is 6.97%.

According to the issuance announcement of the "15 Tianan Property Insurance Bonds," the company can only repay the principal and interest of the current bonds under the premise of ensuring that the solvency adequacy ratio is not lower than 100% after repaying the principal and interest, and that it has the ability to repay the principal and interest of other liabilities.

From 2016 to 2019, the "15 Tianan Property Insurance Bonds" paid interest on schedule. Until July 2020, the former China Banking and Insurance Regulatory Commission implemented takeover of Tianan Property Insurance. In September of the same year, the company issued an announcement stating that it would not exercise the redemption option for the "15 Tianan Property Insurance Bonds," and the bonds have since adopted accrued interest accounting.

A chief financial analyst at Founder Securities pointed out in a recent research report that looking ahead, there may be two solutions: first, debt restructuring and extension payment; second, full write-off of capital bonds.

In 2020, Baoshang Bank conducted a "full write-off" of 6.5 billion yuan of Tier 2 capital bonds, which means the principal was written off entirely. This was the first time in the domestic banking Tier 2 capital bond issuance history.

In the prospectus of the "15 Tianan Property Insurance Bonds," the company stated that insurance company capital supplementary bonds refer to bonds issued by insurance companies with approval for capital supplementation, with an issuance term of more than 5 years (including 5 years), with a liquidation order after policy liabilities and other ordinary liabilities, but before insurance company equity capital. The prospectus warned that "if the issuer undergoes bankruptcy liquidation, investors may not be able to obtain all or part of the principal and interest."

In the industry's view, this incident marks the first bond default in insurance, signaling a turning point in the industry's rigid redemption of bonds. The financial team at Guosen Securities Economic Research Institute pointed out that investors need to re-evaluate the risk-return characteristics of capital instruments issued by financial institutions, especially insurance institutions, and market pricing will become more refined.

"Reviewing the historical situation of unredeemed insurance bonds, their issuers generally fall into two categories: insurance companies with poor operating conditions leading to declining solvency, and insurance companies under regulatory takeover," the team said.

The chairman and CEO of a consulting firm expressed that the first insurance capital bond default has torn away the industry's rigid redemption veil. It will have a short-term impact on market sentiment and widen credit spreads, but the volume is small and systemic importance is low, so risk spillover is limited.

In the industry's view, the holders of capital supplementary bonds issued by insurance institutions are mainly institutional investors, with limited impact on individuals, but it may affect the liquidity stability of related financial institutions.

The consulting firm's CEO believes that when investing in insurance capital bonds, priority should be given to issuers with state-owned controlling stakes, adequate solvency ratios, and high proportions of traditional protection-oriented business. For existing bonds, stop-loss should be set according to the dual dimensions of "remaining term less than 1 year and redemption right approaching." If the spread is greater than 400bp and fundamentals deteriorate, decisively sell at a discount and do not bet on the illusion of rigid redemption.

It is noted that Tianan Property Insurance's risk disposal adopts a "new establishment succession + bankruptcy" model. In 2024, Tianan Property Insurance's risk resolution made important progress - its insurance business was transferred to Shen Neng Property Insurance.

Shen Neng Property Insurance was established in January 2024, opened in May 2024, with a registered capital of 10 billion yuan. In June 2025, the National Financial Regulatory Administration announced administrative penalty information. Due to multiple illegal and irregular behaviors, Tianan Property Insurance's insurance business license has been revoked.

Among the insurance companies taken over in the same batch as Tianan Property Insurance, Tianan Life Insurance issued capital supplementary bonds on December 29, 2015, with a total issuance amount of 2 billion yuan. The bonds will mature in December 2025 and are currently in the risk disposal period, with interest payments temporarily suspended.

In October 2023, regulatory authorities issued an announcement agreeing to Zhonghui Life Insurance taking over the insurance business and corresponding assets and liabilities of Tianan Life Insurance, and requiring Zhonghui Life Insurance to effectively protect the legitimate rights and interests of insurance consumers and creditors.