Since September, capital increases at insurance companies have become a frequent occurrence.

The most closely watched development was the Ministry of Finance's announcement on September 6 that it would directly inject 70 billion yuan into five central state-owned insurance enterprises. Of this amount, 35 billion yuan was allocated to China Life Insurance Group, 10 billion yuan to China Export & Credit Insurance Corporation, and 7 billion yuan to China Taiping Insurance Group. People's Insurance Company of China plans to issue A-shares to a specific target—the Ministry of Finance—with a planned fundraising amount not exceeding 15 billion yuan. China Reinsurance Group plans to have the Ministry of Finance subscribe to its domestic shares in cash, with a planned fundraising amount of 3 billion yuan. The market widely views this round of capital injections into state-owned insurance groups as precautionary in nature. In the short term, it will ease the pressure on solvency—particularly the core solvency adequacy ratio—caused by the decline of the "750-day curve" (the 750-day moving average of government bond yields). In the medium term, it will remove concerns about insurance capital increasing its participation in medium- and long-term market investments. In the long term, it will enhance the industry capital strength and influence of central state-owned insurance enterprises.

Beyond the capital increases at state-owned insurers, three small and medium-sized insurance companies also received capital injections in September. On September 21, the Fujian Financial Regulatory Bureau issued an administrative licensing notice approving Strait Jinqiao Property Insurance to increase its registered capital by 1 billion yuan, from 1.5 billion yuan to 2.5 billion yuan. Junlong Life Insurance also recently announced that its shareholders' meeting had approved a 1 billion yuan capital increase proposal, with the company's registered capital planned to increase from 2.6 billion yuan to 3.6 billion yuan. The Chinese shareholder Xiamen C&D Group and the foreign shareholder Taiwan Life Insurance would each contribute 500 million yuan, maintaining the 50-50 shareholding structure after the capital increase. China Fishery Mutual Insurance Society announced on September 23 that, with approval from the National Financial Regulatory Administration, its operating funds (registered capital) had been increased to 550 million yuan, with the contributing parties being original shareholders including the China Fishery Mutual Insurance Association and the Zhejiang Fishery Mutual Insurance Association.

Overall, since the beginning of this year, capital replenishment actions at insurance companies have occurred frequently, with nearly 20 insurers accelerating their capital supplementation. In addition to the companies mentioned above, HSBC Life increased its capital twice during the year, Huatai Life's nearly 1 billion yuan capital increase was completed, and capital increase plans by Bohai Property Insurance, China United Life Insurance, and others have also received regulatory approval. Today we will review the capital increase situation of insurance companies since the start of this year.

Nearly 20 Capital Increases: Small and Medium-Sized Insurers Make Multiple Small-Value Injections, Central SOEs Receive 70 Billion Yuan from the Ministry of Finance!

Since the beginning of the year, nearly 20 companies have announced or completed related capital increase plans. In January, Strait Jinqiao Property Insurance announced a 1 billion yuan capital increase plan, with four companies including Fujian Provincial Investment and Development Group contributing 1 billion yuan, raising registered capital from 1.5 billion yuan to 2.5 billion yuan. This capital increase was officially approved by regulators and successfully completed recently. Also in January, HSBC Life proposed a plan for its sole shareholder, HSBC Insurance (Asia), to inject 556 million yuan, which was approved by the Shanghai Financial Regulatory Bureau in June, increasing the company's registered capital to 3.232 billion yuan. Notably, in August of this year, HSBC Life proposed a second capital increase plan within the year, with shareholders planning to inject an additional 472 million yuan, further raising registered capital to 3.704 billion yuan. This plan is pending regulatory approval.

In April, China United Life Insurance's two major shareholders, China Insurance Group and China Property Insurance, planned to jointly inject 300 million yuan. After the capital increase, the shareholding ratios of both shareholders remained unchanged, and the company's registered capital would increase from 4.1 billion yuan to 4.4 billion yuan. This capital increase plan was approved by the Beijing Financial Regulatory Bureau at the end of June. Entering May, capital increases at insurance companies entered an accelerated phase. Bohai Property Insurance's 93 million yuan capital increase plan was approved. Huatai Life's shareholder, Huatai Insurance Group, fully contributed 970 million yuan, pushing the company's registered capital from 4.3125 billion yuan to 5.2825 billion yuan. This plan received regulatory approval this month. In June, ZhongAn Online Property Insurance's 215 million yuan capital increase was approved by regulators, with registered capital increasing from 1.4698 billion yuan to 1.6848 billion yuan. Additionally, cross-strait joint venture life insurer Lujiazui Guotai Life Insurance's two major shareholders planned to jointly inject 2 billion yuan, increasing registered capital from 3 billion yuan to 5 billion yuan. This capital increase plan is still pending regulatory approval. Changsheng Life Insurance, which faces solvency pressure, simultaneously listed a capital increase and share expansion project on the Beijing Stock Exchange to bring in new strategic investors. In August, Changjiang Property Insurance announced plans to introduce Hubei Provincial Water Resources and Hydropower Planning Survey and Design Institute as a new shareholder, issuing an additional 249 million shares and raising approximately 250 million yuan, with registered capital increasing from 2.797 billion yuan to 3.046 billion yuan. The capital increase plan is still pending regulatory approval.

In September, domestic insurers' capital increases reached a peak. Junlong Life Insurance's shareholders' meeting approved a 1 billion yuan capital increase proposal, with the company's registered capital planned to increase from 2.6 billion yuan to 3.6 billion yuan. The Chinese shareholder Xiamen C&D Group and the foreign shareholder Taiwan Life Insurance would each contribute 500 million yuan, maintaining the 50-50 shareholding structure after the increase. The 1 billion yuan capital increase by Strait Jinqiao Property Insurance mentioned earlier was also officially completed this month, and China Fishery Mutual Insurance Society completed a 50 million yuan capital increase. The Ministry of Finance's massive 70 billion yuan move pushed this year's insurance capital increases to their climax. China Life Insurance (Group) Company stated that the Ministry of Finance would inject 35 billion yuan into the company. People's Insurance Company of China announced a plan to issue A-shares to specific targets, with this issuance planned to be subscribed by the Ministry of Finance in cash, with a fundraising scale not exceeding 15 billion yuan. China Taiping Insurance Group stated that the Ministry of Finance would inject 7 billion yuan into the group. China Export & Credit Insurance Corporation said the Ministry of Finance would inject 10 billion yuan into the company. China Reinsurance Group disclosed a plan to issue domestic shares to specific targets, planned to be subscribed by the Ministry of Finance in cash, with a total planned fundraising amount of 3 billion yuan, which after deducting related issuance expenses would be entirely used to increase the company's core tier-one capital.

Multiple Factors Drive Insurer Capital Increases, But Enhancing Self-Sustaining Profitability Is the Long-Term Solution!

From the underlying drivers, insurance is a capital-consuming industry. As business expands and long-term protection policies continue to accumulate, reserve provisions increase, continuously consuming core capital. Overall, this year's concentrated industry capital increases are driven by three core reasons.

First, the comprehensive implementation of the C-ROSS Phase II rules has made capital measurement standards stricter. As a regulatory hard constraint, insurance companies must meet the baseline requirements of a core solvency adequacy ratio of no less than 50% and a comprehensive solvency adequacy ratio of no less than 100%. C-ROSS Phase II is more prudent in measuring assets, liabilities, and various risks. Many institutions have seen tightened capital recognition, higher capital consumption for the same business scale, and passive pressure on capital adequacy ratios. Capital increases have become the most direct means of supplementing core tier-one capital. Compared with subsidiary capital instruments such as capital bonds, shareholder capital injections are directly counted as core capital, representing the highest capital quality and serving as the preferred solution when solvency is under pressure. For example, in the first quarter of this year, Bohai Property Insurance had a core solvency adequacy ratio of 103.2% and a comprehensive solvency adequacy ratio of 170.51%, significantly below the industry average for property insurers during the same period (core solvency adequacy ratio of 210.6%, comprehensive solvency adequacy ratio of 242.6%). After the capital increase was completed in May, its second-quarter core solvency adequacy ratio rose to 125.05% and comprehensive solvency adequacy ratio to 195.86%. Although still below the industry average, it was clearly a significant relief.

Second, long-term interest rates are declining, and reserve provision pressure persists. The liability duration of a large number of long-term life insurance policies spans twenty to thirty years. In a low-interest-rate environment, insurance institutions need to increase insurance liability reserves, eroding net assets and continuously consuming capital. For small and medium-sized life insurers in transition with heavy new business investment, this pressure is even more pronounced.

Third, business expansion and strategic positioning require capital support. For insurers with improving operations and plans to expand business, capital increases can raise underwriting ceilings and support new business and new channel development. HSBC Life is one representative company. Since 2022, HSBC Life has successfully completed four capital increases and has initiated a fifth capital increase plan. Behind this lies what was an "inevitable move" after the company's rapid growth. Data shows that HSBC Life's full-year premium income in 2022 was 3.725 billion yuan, while by 2025 it had reached 13.605 billion yuan, a growth of 265.23% over three years. The company's total assets also "surged" from 19.705 billion yuan to 55.085 billion yuan. This requires the company to make matching investments in building risk management capabilities.

In addition, some local state-owned capital and industrial capital have taken the opportunity of capital increases to establish a presence in insurance financial licenses. A small number of institutions are doing so to dispose of existing risks and resolve historical legacy issues, using shareholder capital injections to thicken capital and repair balance sheets.

From the perspective of capital increase sources, most capital increase funds for small and medium-sized insurers come from existing shareholders, including local state-owned capital, group parent companies, foreign shareholders, and industrial capital. Some projects also raise funds publicly from qualified investors. But overall, capital increases are merely external capital transfusions—a means of improving capital indicators—and cannot fundamentally solve the operating problems of some insurers. Especially for small and medium-sized insurance companies, only by continuously improving business refinement, reducing related costs, and enhancing profit "self-sustaining" capabilities can the problem of excessive capital consumption be thoroughly resolved and long-term healthy development achieved. For top-tier central state-owned enterprises, this capital injection from the Ministry of Finance will effectively thicken the solvency safety cushion, open up the ceiling for business growth, and give these companies greater flexibility and freedom in product innovation and long-term capital deployment.