Zhi Tong Cai Jing·2025-08-01 06:31Core Viewpoint - The insurance sector is experiencing a decline in stock prices due to the formal initiation of a mechanism for adjusting the guaranteed interest rates of insurance products, leading to significant shifts in product offerings and business strategies among major insurance companies [1] Group 1: Stock Performance - As of the report, major insurance stocks have seen notable declines: Xinhua Insurance down 4.17% to HKD 48.2, China Life down 3.52% to HKD 21.95, China Pacific Insurance down 3% to HKD 30.7, and China Property & Casualty Insurance down 0.37% to HKD 16.26 [1] Group 2: Regulatory Changes - The China Insurance Industry Association has released data indicating that the research value for the guaranteed interest rate of ordinary life insurance products is now 1.99%, a decrease of 14 basis points from the previous period [1] - This value has remained below the current guaranteed interest rate by more than 25 basis points for two consecutive quarters, triggering the dynamic adjustment mechanism for life insurance guaranteed interest rates [1] Group 3: Business Implications - Dongwu Securities reports that the reduction in guaranteed interest rates will lead to a continued decrease in the liability costs of new business for insurance companies, while the gradual dilution of new business against existing business will improve the average cost of existing policies [1] - Following the adjustment of guaranteed interest rates, the minimum return on participating insurance products is only 25 basis points lower than traditional insurance, making them more attractive to customers due to their floating return design [1] - It is anticipated that the structure of new business will accelerate its shift towards participating insurance, and the increased proportion of participating insurance will further alleviate the rigid cost pressures faced by insurance companies [1]