Zhi Tong Cai Jing·2025-07-29 10:54Group 1 - The adjustment of pricing interest rates may signal the end of the golden era for traditional increasing amount whole life insurance (IWLP), which, despite being favored by consumers, poses high interest rate risks for insurance companies [1] - The attractiveness of participating products is increasing, benefiting from a projected return rate of 6% to 6.5% in the Hong Kong market and similar benefits in the mainland market [1] - UBS estimates that the actual internal rate of return (IRR) for policyholders under the traditional product's 2.0% pricing interest rate is only 1.6% to 1.9%, indicating limited appeal for long-term holding (e.g., over 10 years) [1] Group 2 - In the transition to participating products, AIA China (01299) holds an advantage due to strong investment capabilities, with an average comprehensive investment return rate of 4.8% from 2021 to 2024, surpassing the industry average of 4% [2] - AIA China's new business value from long-term savings through agent channels exceeded 80% in the first quarter of 2025 [2] - China Ping An (601318) and China Life (601628) also performed better than their peers in the transition to participating products [2] Group 3 - The China Insurance Industry Association recently lowered the pricing interest rate (PIR) benchmark by 14 basis points to 1.99%, which is 51 basis points lower than the current traditional product's 2.5% [3] - This adjustment aligns with market expectations and reflects a downward trend in market interest rates anticipated for the second quarter of 2025 [3] - Major insurance companies have reduced the pricing interest rates for traditional, participating, and universal products to 2.0%, 1.75%, and 1.0%, respectively, indicating a regulatory push towards participating products to mitigate interest spread risk [3]