(Yicai Global) June 26 -- Chinese insurers cranked up their fundraising efforts in the first half amid a tightening regulatory environment, raising CNY80.6 billion (USD11.2 billion) so far this year, which outstrips the CNY54 billion raised in the whole of 2022, according to government data.

As of yesterday, 10 insurers had raised CNY18.7 billion via capital increases, and 11 others banked CNY61.9 billion via bond sales to take advantage of lower issuance costs, Yicai Global calculated from incomplete official statistics, including some from the National Administration of Financial Regulation.

Unlike last year, when most of the funding came from new share issues, about 80 percent of the funds raised by insurers in 2023 have come from bonds as lower market interest rates have brought down the cost of issuance compared with the past two years, an industry analyst told Yicai Global.

Raising funds through capital increase does not add to debt, but it is difficult to sustain, the analyst added.

With bond issuance costs down, some insurers chose to redeem existing bonds early in the first half and replace them with new lower interest-bearing bills, thereby increasing debt issuance, added the analyst.

Insurers have concentrated their efforts on raising money to supplement capital and improve solvency this year, the analyst noted. The need to supplement their capital base has become more urgent than in the past two years because of tighter industry regulation since the start of last year.

Under the new system, the average comprehensive solvency ratio at Chinese insurers fell to 190.3 percent at the end of the first quarter from 196 at the end of last year and 224.2 percent at the end of the first quarter of 2022, according to data from the regulator.

Moreover, the average core solvency ratio fell to 125.7 percent as of March 31, down from 128.4 percent at the end of last year and 150 percent as of March 31, 2022.

Editors: Tang Shihua, Futura Costaglione