If the issue is approved by shareholders, it would add 50 percentage points to China Life's solvency margin, Vice-President Liu Jiade told a news conference.

China Life's (2628.HK)(601628.SS) solvency margin is currently between 170 percent and 180 percent, he said. The company announced the debt issue on Monday.

"If the solvency ratio remains around 200 percent, we will be quite comfortable with that," he said, adding that external financing will become the main means for China Life to replenish its capital base.

Liu also said that China Life's profitability should improve in 2012.

The company reported on Monday that fourth-quarter net profit plunged 82 percent to 1.6 billion yuan from the same period a year earlier, hit by lower investment returns and slower growth, and said it faced further headwinds from economic and market uncertainty and fiercer competition.

For the full year, China Life said profit fell nearly 46 percent.

Chinese insurance companies, which invest around 10 percent of their assets in equities, have been badly hit by a 22 percent slump in the domestic stock market last year.

China Life shares have gained more than 7 percent in the last three months, buoyed by a global rally in riskier assets, but have underperformed a 14 percent gain in the Hong Kong financial sub-index .HSNF, of which it is a part.

Smaller rival Ping An Insurance (Group) Co of China Ltd (601318.SS) (2318.HK) has proven less vulnerable to stock market volatility due to its strategy of business diversification, posting a fourth-quarter profit rise of 9 percent.

Reflecting slower business growth, China Life's premium income in the first two months of this year fell 6.2 percent from a year earlier to 79.4 billion yuan.

Its market share in China fell to around a third last year from nearly 70 percent in 2000, according to an analysis by Credit Suisse.

Shares of China Life, which has a market value of about $75 billion, rose 2.7 percent on Tuesday, outperforming the Hang Seng Index's 1.8 percent gain. ($1 = 6.3140 Chinese yuan)

(Reporting By Clare Baldwin and Alison Lui. Writing by Samuel Shen.; Editing by Chris Lewis & Kim Coghill)

• A Permanent Economic Emergency