Study Of Chinese Insurance Company Subordinated Debt Financing

In September 2004, the CIRC has promulgated the"Insurance Company to Issue Subordinated Debt Management Tentative Approach". Then, insurance companies subordinated debt begins to be replenished in China. Because of the huge market demand, its prospects are bright. However, there are many of problems in practicing. Therefore study of insurance companies subordinated debt financing has great practical significance.This dissertation makes an in-death analysis on those problems. First, there is something wrong with the idea when Chinese insurance companies issue subordinated debt. Issuing subordinated debt is only applied to facilitate channel of supplement to the capital. It is always neglected that the subordinated debt can't completely solve crisis on solvency which can just be solved by increasing share capital and promoting profitability of insurance company. Second, market constraints function of insurance company is limited. Third, financial pressure on insurance companies is heavy. Firth, the problem of mutual-holding is serious in the issue of Chinese insurance companies financing subordinated debt, mainly leading to system risk, the risk of moral hazard and liquidity risks.On the basis of analysis of these issues, the author puts forward some strategies to the development of Chinese insurance companies subordinated debt. First, to promote profitability of insurance companies. Second, to strengthen the control of the mutual holding of subordinated debt . Third, the subordinated debt need entering in the sub-market as soon as possible. Forth, to improve china financial infrastructure. Fifth,to establish the credit rating system monitored by the main creditors.This research has a view to address the realities of insurance companies subordinated debt financing issues point contribution. At the same time, with financial reforms of insurance companies to improve the environment in-depth, subordinated debt can demonstrates its superiority.