ZHONGTAI SECURITIES·2025-07-27 11:15Investment Rating - The industry investment rating is maintained at "Overweight" [2] Core Insights - The current predetermined interest rate for ordinary life insurance products is assessed at 1.99%, down from 2.13%, reflecting a year-on-year decrease of 14 basis points [5] - The adjustment mechanism for predetermined interest rates has been triggered, leading to a non-symmetrical reduction in the maximum predetermined interest rates for traditional, participating, and universal insurance by 50, 25, and 50 basis points respectively [5] - The adjustment is primarily influenced by a significant drop in the yield of 10-year government bonds in Q4 2024, which has been anticipated by the market [5] - The report indicates that the maximum predetermined interest rate for ordinary insurance products is now 2.0%, down from 2.5%, while the maximum for participating insurance is now 1.75%, down from 2.0% [5] - The report suggests that the adjustment of 50 basis points may not align with the expected 25 basis points based on the notification requirements, but anticipates further declines in the predetermined interest rates in the second half of 2025 [5] Summary by Sections Basic Conditions - The research value has been adjusted as expected, with the current rates reflecting a downward trend due to market conditions [5] - As of the end of Q2 2025, the 5-year LPR is at 3.5%, the 5-year fixed deposit benchmark rate is at 1.3%, and the 10-year government bond yield is at 1.65% [5] Industry-Market Comparison - Major life insurance companies are expected to gradually lower their product predetermined interest rates following the release of the research value [5] - The report highlights that the sensitivity of gross premium growth to interest rate changes is lower for participating insurance compared to traditional insurance [5] Investment Recommendations - The non-symmetrical reduction in predetermined interest rates is expected to benefit high-quality life insurance companies with strong sales capabilities in participating insurance [5] - The report recommends focusing on companies such as Xinhua Insurance, China Ping An, AIA, China Life, China Pacific Insurance, and China People’s Insurance [5]