Guo Ji Jin Rong Bao·2025-07-29 10:54Core Viewpoint - The insurance sector in China has experienced significant stock price increases, driven by adjustments in the predetermined interest rates for insurance products, which are expected to enhance the competitiveness of participating insurance products and improve the overall financial health of insurance companies [2][3][5]. Group 1: Stock Performance - As of July 28, the A-share insurance sector led the market with a 3.50% increase, with companies like New China Life Insurance rising over 4% and hitting historical highs [2]. - In the Hong Kong market, insurance stocks also showed strong performance, with AIA Group increasing over 4% and New China Life Insurance seeing a rise of more than 7% [2]. Group 2: Regulatory Changes - On July 25, the China Insurance Industry Association held a meeting where experts suggested a new predetermined interest rate of 1.99% for ordinary life insurance products, leading to adjustments in the maximum rates for various insurance products effective September 1 [3][4]. - The maximum predetermined interest rate for ordinary insurance products is set at 2.0%, while for participating insurance products, it is 1.75%, and for universal insurance products, it is 1.0% [3]. Group 3: Market Dynamics - The reduction in predetermined interest rates is expected to create a favorable environment for participating insurance products, which may see increased market share as traditional insurance products face lower rates [4][5]. - The adjustment is anticipated to alleviate the pressure on liability costs and investment risks for insurance companies, allowing for a higher allocation of equity investments and improved yield flexibility [5]. Group 4: Premium Growth - In the first half of the year, the insurance industry reported a total premium income of 3.74 trillion yuan, reflecting a year-on-year growth of over 5%, with life insurance companies contributing 2.77 trillion yuan, a 5.4% increase [6]. - New China Life Insurance reported a premium income of 121.26 billion yuan, marking a 23% increase, while China Pacific Insurance achieved 282.01 billion yuan, a 5.9% growth [6]. Group 5: Future Outlook - Analysts predict that the transition towards participating insurance products will accelerate, with improvements in liability costs and a continued increase in new business value (NBV) despite challenges in value realization due to low interest rates [7]. - The property insurance sector is expected to see slow growth, influenced by fluctuations in new car sales and declining average premiums, but overall profitability is anticipated to improve due to better cost management and reduced catastrophic losses [7].