Core Insights - Longevity is a significant indicator of social progress and development, but managing and diversifying longevity risks presents new challenges for society [1] - Longevity risk refers to the financial pressure arising from individuals or groups living longer than expected, impacting pension and insurance obligations [1] - The commercial annuity insurance market, a tool for hedging longevity risk, faces substantial challenges due to the accelerating aging trend and interest rate changes [1][2] Group 1: Longevity Risk Overview - As of the end of 2024, the elderly population aged 60 and above in China is projected to reach 310 million, accounting for 22% of the total population [1] - The dependency ratio for the population aged 65 and above is 22.8%, indicating a growing financial burden on the working-age population [1] - The insurance industry is urged to adopt a multi-faceted approach to address longevity risk, including precise pricing and risk management [2] Group 2: International Practices and Innovations - In the UK, pension plans hold over £3 trillion in assets and are exploring de-risking solutions, with the market for risk transfer transactions expected to reach £70 billion by 2025 [3] - The concept of longevity risk swaps, where direct insurers transfer longevity risk to reinsurers, has been practiced in Europe since the mid-2000s [3] - Hong Kong's insurance industry is developing Insurance-Linked Securities (ILS) to transfer low-frequency, high-loss risks to the capital market [4][5] Group 3: Challenges and Recommendations for China - China faces challenges in implementing longevity risk transfer tools, including data availability, regulatory environment, and market maturity [7] - Recommendations include establishing a mortality index, conducting pilot programs under regulatory sandboxes, starting with simpler products, and fostering a supportive market ecosystem [7] - The development of a mortality improvement rate prediction model tailored to China's data characteristics is underway, which is crucial for managing longevity risk [8]

Summary of Key Points from the Conference Call Industry Overview - The insurance industry outlook for 2026 is optimistic, with pre-recorded premiums exceeding expectations, primarily benefiting from declining bank deposit rates and increased competitiveness of participating insurance products. The proportion of premiums from bancassurance channels is expected to rise, becoming a key growth driver for premiums [1][5][6]. Core Insights and Arguments - **Interest Rate Impact**: The rise in interest rates is favorable for the insurance asset side, with the 10-year government bond yield increasing from 1.6% at the beginning of the year to 1.86%. This alleviates concerns about spread loss risks, although there may be a slight negative impact on financial statements in the short term [1][3][7]. - **Premium Growth**: It is anticipated that new single premiums and new business value will achieve double-digit growth in 2026, with some companies potentially seeing triple-digit growth through bancassurance channels. This growth is driven by improved liability structure, channel expansion, and enhanced investment returns [1][5][6]. - **Bond Allocation Trends**: There is a decreasing willingness to allocate to bonds, with the proportion of bonds in the life insurance sector slightly declining to around 51% by the end of Q3. Companies are shifting from modified duration management to effective duration management, reducing long-term bond allocation pressure [1][8]. - **Equity Investment**: The core equity allocation ratio in the life insurance sector reached 15.5%, the highest level in 11 to 14 years, benefiting from regulatory encouragement for long-term holdings and stock market performance. Despite average performance of dividend stocks, large asset bases allow for diversified investments [1][9]. Additional Important Insights - **Valuation Levels**: The insurance sector remains undervalued, even with ROE reaching 30%-40%. The market has not significantly outperformed the CSI 300 index, indicating potential for growth [2][11][12]. - **Policy Environment**: The regulatory environment has been friendly over the past two years, with no negative policies impacting the industry, fostering a positive outlook for future development [2][13]. - **Performance of China Ping An**: China Ping An has performed well due to its high and stable dividend yield and large free float market capitalization. The active holding ratio of public funds in insurance stocks is low, indicating room for increased investment [1][10]. Conclusion - The insurance industry is poised for growth in 2026, driven by favorable interest rates, improved premium collection channels, and a supportive regulatory environment. The current valuation levels suggest potential upside, particularly for leading companies like China Ping An.

Core Viewpoint - The insurance industry is facing significant challenges due to a prolonged low interest rate environment, which affects both asset management and liability costs, leading to a structural transformation necessity [1][3]. Group 1: Current Economic Environment - The yield on China's 10-year government bonds has dropped to a historical low of 1.7% to 1.9%, indicating a potential long-term downward trend [1]. - The insurance business's nature results in a rigid liability cost structure, particularly with long-term policies locking in predetermined rates, creating a conflict between declining asset yields and fixed liability costs [3]. Group 2: Traditional Investment Strategies - Traditional "fixed income plus" strategies, which previously provided stable spreads, are becoming ineffective in the current low-rate environment [3]. - The supply of high-quality non-standard assets, such as infrastructure debt plans, is rapidly shrinking, leading to an "asset scarcity" phenomenon [4]. Group 3: Need for Structural Change - The industry consensus is that superficial adjustments are insufficient; a comprehensive overhaul of asset-liability management is required [4]. - A return to the core principles of insurance management—safety, profitability, and liquidity—is essential, with a focus on matching yield costs, duration structure, and liquidity [5]. Group 4: Changes in Fixed Income Asset Allocation - China Pacific Insurance has increased its allocation to long-term government bonds from 12.5% to 46.2% over the past eight years [6]. - There is a need for a balanced approach to duration management, as excessively pursuing a zero duration gap could increase asset pressure during market rebounds [6]. Group 5: Alternative and Equity Investments - The insurance asset management sector is increasingly incorporating alternative and equity assets to enhance long-term returns and mitigate inflation impacts [9]. - In the first three quarters of this year, the primary market for new fund raising reached 1.16 trillion yuan, a year-on-year increase of 8% [10]. Group 6: Global Investment Strategies - Global asset allocation is deemed essential, with a focus on building teams and managing foreign exchange risks effectively [12][13]. - The insurance industry must develop capabilities in foreign exchange risk management to succeed in overseas investments [14].

Core Viewpoint - The adjustment of risk factors for insurance companies aims to enhance their capital management and encourage long-term investments, particularly in the stock market and support for foreign trade enterprises [1][16]. Group 1: Background - The implementation of the second phase of solvency regulations has put pressure on insurance companies' solvency ratios, with the overall solvency adequacy ratio declining since the rules were enacted in 2022 [2][17]. - Despite regulatory optimizations in September 2023, the solvency adequacy ratio remains below levels prior to the second phase implementation [17]. - As of Q3 2025, the stock allocation ratio for the insurance industry reached 10%, an increase of 1.2 percentage points from the previous quarter and 2.5 percentage points from the beginning of the year [2][17]. Group 2: Content of the Notification - The notification includes differentiated adjustments to risk factors based on holding periods for stocks, encouraging long-term investments [4][18]. - For stocks in the CSI 300 index and the CSI Low Volatility 100 index held for over three years, the risk factor is reduced from 0.3 to 0.27 [4][18]. - For stocks listed on the Sci-Tech Innovation Board held for over two years, the risk factor is reduced from 0.4 to 0.36 [4][18]. - The risk factor for export credit insurance and overseas investment insurance premiums is reduced from 0.467 to 0.42, and the reserve risk factor is reduced from 0.605 to 0.545 [4][18]. Group 3: Internal Control and Solvency Management - Insurance companies are required to enhance internal controls and accurately measure stock holding periods to improve long-term investment management capabilities [5][19]. - There is an emphasis on strengthening solvency management to ensure that solvency data is accurate and complete [5][19]. Group 4: Impact - The adjustments are expected to promote long-term investments by insurance capital, alleviating pressure on solvency ratios and enhancing investment flexibility [14][28]. - In a low-interest-rate environment, increasing equity investment ratios can help insurance companies improve investment yield elasticity and mitigate potential interest spread losses [14][28].

Core Viewpoint - The article discusses the adjustments made by the National Financial Regulatory Administration to the risk factors related to insurance companies' investment activities, aimed at enhancing their solvency and encouraging long-term investments in the stock market [7][9]. Group 1: Event Summary - On December 5, the National Financial Regulatory Administration issued a notice to adjust the risk factors for insurance companies' related business, focusing on enhancing the role of insurance funds as patient capital [7]. - The adjustments include lowering the risk factors for stocks held for over three years and two years, specifically for the CSI 300 Index and the STAR Market stocks, to encourage long-term investments [10]. - The risk factors for export credit insurance and overseas investment insurance have also been reduced to support foreign trade enterprises [10]. Group 2: Background and Context - The solvency of insurance companies has been under pressure due to stricter capital recognition requirements and increased risk factors since the implementation of the second phase of the solvency regime [8]. - Despite regulatory optimizations in September 2023, the overall solvency adequacy ratio remains below levels seen before the new rules were implemented [8]. - The proportion of stocks held by insurance companies has increased significantly, with a 1.2 percentage point rise in stock allocation to 10% by the end of Q3 2025 compared to the previous quarter [8]. Group 3: Impact Analysis - The adjustments are expected to promote long-term investments by insurance funds, alleviating solvency pressures and enhancing investment flexibility [11]. - The changes are likely to improve the long-term return levels for insurance companies, helping to mitigate risks associated with low interest rates and enhancing market resilience [12]. - By increasing the allocation to high-return, high-dividend stocks, insurance companies can secure more stable income and improve their net investment returns [12].

2025 年 12 月 6 日 行业研究 股票风险因子差异化下调，推动险资进一步发挥耐心资本优势 ——《关于调整保险公司相关业务风险因子的通知》点评 非银行金融 增持（维持） 作者 分析师：王一峰 执业证书编号：S0930519050002 010-57378038 wangyf@ebscn.com 分析师：黄怡婷 执业证书编号：S0930524070003 010-57378023 huangyiting@ebscn.com 行业与沪深 300 指数对比图 资料来源：Wind 相关研报 长周期考核权重升至 70%，利好险资加大入 市力度——《进一步加强国有商业保险公司 长周期考核的通知》点评（2025-07-12） 保险权益投资空间拓宽，长期资金入市有望 提速——《关于调整保险资金权益类资产监 管比例有关事项的通知》点评（2025-04-09） 进一步明确长周期考核要求，提升中长期资 金入市力度——《关于推动中长期资金入市 工作的实施方案》点评（2025-01-23） 要点 另一方面，政策鼓励下今年以来险资入市力度显著增强，25Q3 末行业（人身险公 司+财产险公司）股票配置比例达 10%，环比+1.2pc ...

Core Viewpoint - The insurance capital (险资) has become a focal point in the market this year, driven by policies promoting medium to long-term capital inflows, effectively optimizing the capital market structure and encouraging a shift towards value investing [1][3]. Group 1: Insurance Capital Market Activity - As of the end of Q3 2025, insurance capital appeared among the top ten shareholders of 633 A-share listed companies, with 270 new stock positions taken [3]. - The total market value of insurance capital holdings in A-shares exceeded 650 billion yuan, reflecting a growth of over 6% compared to mid-2025 [3]. - The insurance sector's investment strategy is characterized by a focus on long-term stability and value, aligning with the overall market recovery trend [5]. Group 2: Investment Performance and Preferences - In Q3 2025, the Shanghai Composite Index rose by 12.73%, with insurance companies' investment results significantly contributing to their net profit growth [4]. - Insurance capital's holdings in the top five industries by market value include banking, public utilities, transportation, communications, and electrical equipment [5]. - The top five industries by the number of individual stocks held by insurance capital are electronics, pharmaceuticals, electrical equipment, machinery, and automobiles [5]. Group 3: Investment Strategies and Tools - Insurance capital's investment strategy is primarily driven by liability-driven investment (LDI), focusing on matching assets with liabilities [6]. - The strategy includes a foundation of high-rated bonds (60%-70% of the portfolio) for stable returns, with equity investments typically comprising 10%-15% [6]. - The insurance version of asset-backed securities (ABS) has emerged as a key tool for insurance capital to navigate low interest rates and market volatility, providing a stable return and extending asset duration [7][9]. Group 4: Growth of Insurance Version ABS - In the first three quarters of 2025, the number of registered insurance asset-backed plans reached 66, with a total scale of 274.58 billion yuan, marking a 25.1% increase year-on-year [8]. - The insurance version of ABS serves as a "stabilizer" for returns and an "extender" for assets, typically offering a higher issuance rate of 5%-6% compared to similar credit bonds [8][9]. - The unique structured design of insurance version ABS allows for risk and return layering, catering to the needs of insurance capital for stable and secure investments [9][10].

Core Insights - The net profit of five A-share listed insurance companies reached CNY 426.04 billion in the first three quarters of 2025, representing a year-on-year increase of 33.5% despite a high base from the previous year [1] - Investment assets of these companies totaled CNY 20.26 trillion by the end of Q3 2025, up 10.4% from the beginning of the year, benefiting from a rising equity market [3] Group 1: Profit Performance - The net profit growth rates for the five insurance companies from highest to lowest are: China Life +60.5%, New China Life +58.9%, PICC +28.9%, Taikang +19.3%, and Ping An +11.5% [1] - In Q3 alone, the combined net profit reached CNY 247.85 billion, a year-on-year increase of 68.3%, with China Life and New China Life leading the growth due to investment income elasticity [1] - By the end of Q3 2025, the total net assets of these companies amounted to CNY 23.11 trillion, reflecting a growth of 10.3% from the beginning of the year [1] Group 2: Life Insurance and Non-Life Insurance Performance - The new business value (NBV) for life insurance companies showed significant growth, with the following year-on-year increases: PICC Life +76.6%, New China Life +50.8%, Ping An +46.2%, China Life +41.8%, and Taikang +31.2% [2] - The premium income for non-life insurance companies also saw positive growth, with PICC +3.5%, Ping An +7.1%, and Taikang +0.1%, primarily driven by stable growth in auto insurance premiums [2] - The combined loss ratio (COR) for these companies improved, with PICC at 96.1%, Ping An at 97.0%, and Taikang at 97.6%, indicating significant increases in underwriting profits [2] Group 3: Investment Performance - The total investment income for the five insurance companies increased significantly, with China Life +40.7%, New China Life +40.3%, PICC +36.6%, Taikang +26.8%, and Ping An +19.5% [3] - The overall net investment yield declined due to pressure from low interest rates on fixed-income assets, while the total investment yield improved due to a strong stock market [3] Group 4: Investment Recommendations - On the liability side, the dynamic adjustment of life insurance interest rates and the transformation of dividend insurance are expected to reduce liability costs and enhance NBV value rates [4] - The continuous improvement in underwriting profits is anticipated as non-life insurance companies advance channel integration and refined expense management [4] - The current public fund holdings in insurance stocks are relatively low, with the insurance index PB valuation at 1.42x, which is at a historical low level [4]

Core Viewpoint - The insurance industry has shown unexpected growth in profits for the first three quarters of the year, with major companies reporting a combined net profit of 426 billion yuan, a year-on-year increase of 33.5% [4][5]. Group 1: Profit Growth and Investment Strategies - The primary source of profit growth for the major insurance companies has been capital market gains, with investment income contributing over 60% to profits [5]. - The CSI 300 index rose by 18% in the third quarter, benefiting insurance companies with large capital and long liability durations, leading to increased equity investment ratios [6]. - Insurance companies have shifted from defensive positions to more aggressive growth strategies, with a focus on technology growth stocks and broad-based ETFs [8][9]. Group 2: Company-Specific Performance - New China Life Insurance was the most proactive player, achieving an 88% year-on-year profit increase in the third quarter, with an annualized total investment return of 8.6% [8]. - China Pacific Insurance experienced a significant turnaround, with core business profits rebounding sharply due to improved investment returns [10]. - China Ping An and China Taiping adopted more conservative investment strategies, with Ping An reporting a non-annualized investment return of 5.4% [12][13]. Group 3: Market Outlook and Future Challenges - The current profit surge may not be sustainable as the market approaches the end of the valuation recovery phase, raising concerns about balancing high returns with long-term solvency risks [16]. - The insurance industry is seeing positive signals in the liability side, with a slight increase in individual insurance agent numbers for the first time in two years [17]. - Future growth will depend on product innovation, channel optimization, and long-term interest rate management as the industry transitions to a "post-asset cycle" phase [18].

Investment Rating - The industry investment rating is "Overweight," indicating that the industry index is expected to outperform the CSI 300 index by 10% or more over the next six months [6]. Core Insights - The report highlights a downward adjustment in the preset interest rate for ordinary life insurance products to 1.90%, a decrease of 9 basis points from the previous quarter, reflecting a trend of gradual reduction since Q4 2024 [4][5]. - The report notes significant growth in new business for major listed insurance companies, with year-on-year increases of 55% for Xinhua, 52% for China Life, 46% for PICC Life, and 21% for Ping An in Q3 2025, driven by a "stop selling" catalyst [4]. - The net profit of five A-share listed insurance companies increased by 33.5% year-on-year in the first three quarters of 2025, with a remarkable 64.3% growth in Q3 alone, primarily due to improved investment returns [4]. Summary by Sections Investment Highlights - The preset interest rate for life insurance products has been adjusted to 1.90%, with a consistent downward trend observed since Q4 2024 [4]. - The market interest rate is expected to stabilize, with the report indicating that the downward adjustment in preset rates will likely slow down in the future [4]. - The report emphasizes the importance of product switching and the potential for value growth in the insurance sector [4]. Market Performance - The report indicates that the insurance sector is currently undervalued, presenting significant investment opportunities, especially as market sentiment improves [4]. - The report suggests that the insurance sector will benefit from a shift in investment styles towards dividend stocks as year-end profit-taking occurs [4]. Recommendations - The report recommends focusing on large listed insurance companies with a clear competitive advantage, as they are expected to perform well in the current market environment [4].