**Event** On September 30, 2025, Tian An Property Insurance, an insurance company under the "Tomorrow Group," released an "Announcement Regarding the Inability to Repay the 2015 Capital Supplementary Bond on Schedule." The company's "15 Tian An Property Insurance" 5.3 billion yuan capital supplementary bond matured on that date, but due to insufficient solvency, the company anticipates being unable to repay principal and interest, marking the first bond default in China's insurance industry.

**Investment Perspective:** Tian An Property Insurance's bond default represents not only the exposure of long-accumulated risks but also reflects China's financial market trend toward breaking rigid payment expectations and advancing market-oriented risk pricing. As the first bond default case in the insurance industry, this will become an important component in China's financial market risk education and pricing mechanism improvement. Regarding bond investments, investors should focus not only on returns but also on financial institutions' corporate governance, ownership structure, and risk control capabilities, conducting detailed risk analysis for institutions with higher tail-end risks. We expect that with the exposure of Tian An Property Insurance's bond risks, industry tail-end risks will continue to clear, having profound implications for industry structure optimization.

**Commentary**

**1. Solvency Below Regulatory "Red Line," Unable to Meet Capital Supplementary Bond Repayment Conditions**

According to Tian An Property Insurance's announcement, the direct cause of this bond default is the company's inability to meet the capital supplementary bond repayment conditions. According to the "Tian An Property Insurance Co., Ltd. 2015 Capital Supplementary Bond Issuance Announcement," the company can only repay the bond principal and interest if it can ensure that the solvency adequacy ratio remains no less than 100% after repaying principal and interest, and has the ability to clear the principal and interest of other liabilities.

As of September 30, 2025, the announcement stated that the company cannot ensure that the solvency adequacy ratio will remain no less than 100% after repaying the bond principal and interest, nor does it have the ability to clear the principal and interest of other liabilities.

According to data disclosed by Tian An Property Insurance, the company has suspended disclosure of quarterly solvency reports since 2020. As of the end of Q4 2019, the company's core and comprehensive solvency adequacy ratios were 185.59% and 236.99%, respectively.

According to regulations, current regulatory standards for insurance company solvency adequacy ratios are: comprehensive solvency adequacy ratio no less than 100%, core solvency adequacy ratio no less than 50%, and comprehensive risk rating at B or above.

"15 Tian An Property Insurance" was issued on September 29, 2015, using a segmented interest calculation method: the bond's coupon rate for the first 5 years was 5.97%, and if the issuer did not exercise redemption rights, the coupon rate for the subsequent 5 years would jump to 6.97%. In July 2020, six "Tomorrow Group" financial institutions including Tian An Property Insurance were legally taken over by regulatory authorities; in September 2020, when the bond reached its first five-year mark, Tian An Property Insurance chose not to exercise redemption rights. The bond defaulted on September 30, 2025.

**2. "Tomorrow Group" Risks Successively Exposed, Regulators Guide Risk Resolution**

The Tian An Property Insurance default event was not sudden but rather the final exposure of long-accumulated systemic risks. In July 2020, multiple "Tomorrow Group" companies including Tian An Property Insurance were placed under regulatory takeover, when the companies already showed serious internal problems.

Since being taken over in 2020, Tian An Property Insurance has not exercised redemption rights and suspended interest payments, with bond interest only handled through "accrued interest accounting." In 2024, Tian An Property Insurance's risk resolution work made certain progress, with the newly established Shenneng Property Insurance Co., Ltd. taking over Tian An Property Insurance's insurance business, including assets, liabilities, and insurance operations. However, the 5.3 billion yuan bond was not transferred but remained under the "shell" Tian An Property Insurance.

In June 2025, the National Financial Regulatory Administration announced administrative penalty information, stating that due to multiple violations, Tian An Property Insurance's insurance business license had been revoked.

Behind the Tian An Property Insurance default event lies the serious impact of corporate governance defects and capital group issues on the healthy operation of financial institutions. Tian An Property Insurance belongs to the "Tomorrow Group" financial institutions, a capital faction that over many years has accumulated and exposed risks across multiple financial institutions due to serious corporate governance problems and benefit transfer behaviors to related parties.

For example, Baoshang Bank experienced a similar event in 2020, with its 6.5 billion yuan Tier 2 capital debt fully written down and accumulated interest of 586 million yuan no longer paid. Since June 2025, financial regulators have imposed penalties on multiple "Tomorrow Group" insurance companies, with Tian An Property Insurance, Tian An Life Insurance, and Huaxia Life Insurance all having their business licenses revoked.

**3. Breaking Financial Bond "Rigid Payment" Perception, Optimizing Industry Risk Clearance**

This Tian An Property Insurance bond default event breaks the insurance industry's "zero default" record for bonds, meaning the long-standing "rigid payment" expectations in financial markets are further broken. Investors need to reassess the risk-return characteristics of capital instruments issued by financial institutions, especially insurance institutions, with market pricing becoming more refined.

Reviewing historical cases of insurance bonds not redeemed, their issuers generally fall into two categories: insurance companies with declining solvency due to poor operating conditions, and insurance companies under regulatory takeover. Among them, Tian An Life Insurance, Tian An Property Insurance, and Huaxia Life Insurance were taken over by regulators due to solvency below regulatory standards. Xintai Insurance, Chang'an Insurance, and Zhujiang Life Insurance are private institutions. All these insurance companies faced continuous solvency decline due to insufficient funds, reflecting to some extent the operational and investment risks faced by some small and medium insurance companies.

Currently, according to Tian An Property Insurance's announcement, the company has actively communicated with bondholders and is fully cooperating with bondholders' related demands. Future arrangements will comprehensively handle this bond within the company's risk disposal work. This disposal approach is consistent with the overall approach to financial risk resolution in recent years - gradually resolving existing risks while ensuring financial business continuity and uninterrupted basic financial services. Meanwhile, by establishing new entities to take over healthy businesses and isolating historical risks, the interests of most financial consumers are protected.

**Investment Recommendations** Omitted.

**Risk Warnings** Long-term interest rate decline; capital market return volatility; liability-side operating condition fluctuations; intensified market competition, etc.