Core Viewpoint - The report from Huayuan Securities indicates that the sensitivity of high-quality life insurance companies' net assets to interest rates is becoming manageable, especially with the regulatory reduction of preset interest rates, leading to a significant decrease in the break-even cost of liabilities for new policies in 2024 [1][3]. Group 1: Impact of Long-term Interest Rates - Long-term interest rates affect life insurance companies' net assets through three main paths: the gap between asset and liability durations for traditional insurance, the impact on contracts with Variable Fee Approach (VFA) characteristics, and the ultimate discount rate applied to policy contracts after 40 years [1]. - For traditional insurance, the gap between asset and liability durations directly influences net assets; for VFA products, a decline in long-term rates can initially be absorbed by the Contractual Service Margin (CSM) until rates drop to a critical level, at which point CSM may turn negative, reflecting losses in insurance service expenses [1]. Group 2: Variability in Companies' Sensitivity to Interest Rates - There is significant variability in how different companies' net assets respond to interest rate declines due to factors such as asset classification, liability product characteristics, duration of bond investments, and minimum guaranteed rates [2]. - Under a stress test scenario where long-term rates decline by 50 basis points at the end of 2024, the net asset declines for China Pacific Insurance and China Life are projected at 7% and 13.6%, respectively, indicating manageable risk levels [2]. Group 3: Decrease in Liability Costs for New Policies - The break-even liability costs for new policies have effectively decreased, with the regulatory guidance reducing the upper limit of preset interest rates for traditional insurance from 3.5% to 2.5% and for participating insurance from 2.5% to 2.0% [3]. - In 2024, the break-even liability costs for China Life and China Pacific are expected to decrease by approximately 50 basis points to around 2.4-2.5%, while Xinhua's costs have dropped by 94 basis points to 2.98% [3]. Group 4: Potential Turning Point for Existing Policies - The cost of existing policies may reach a turning point, with the break-even liability costs for major companies projected between 2.2% and 3% at the end of 2024 [4]. - As the premium cash flow from high-cost policies ceases after the end of the payment period (typically 3-5 years), the industry anticipates a reduction in liability costs post-2028 [4]. - Xinhua has opted to increase its equity allocation to hedge against interest rate declines, effectively capitalizing on opportunities in the equity market in 2024 [4].
华源证券：寿险公司的利差风险或可控 维持保险行业“看好”评级
Zhi Tong Cai Jing·2025-08-12 08:01