Core Viewpoint - Dividend insurance is becoming a significant driver for the transformation of the life insurance industry, with decreasing preset interest rates reshaping competitive logic and product value boundaries [2][12] Group 1: Dividend Insurance Performance - Many life insurance companies have disclosed their cash dividend realization rates for 2024, with over half of the 129 products from five companies achieving a realization rate of 100% or higher, the highest being 306% [3][5] - The dividend realization rate reflects the ratio of actual dividends paid to expected dividends, indicating how well companies convert distributable profits into consumer payouts [3][5] - For example, Xinhua Life reported that 7 out of 21 dividend insurance products had realization rates exceeding 100%, with the highest at 122%, while Sunshine Life's 90 products had an average realization rate of 52.58% [5][6] Group 2: Regulatory Environment - The China Banking and Insurance Regulatory Commission issued a document aimed at curbing vicious competition in the dividend insurance sector, emphasizing the need for sustainable and reasonable dividend levels [9][10] - The document outlines six strict constraints that insurance companies must adhere to when determining dividend levels, including historical performance and capital strength [10][11] - The introduction of dynamic management mechanisms for dividend levels is intended to ensure that dividend decisions are an ongoing process throughout the product lifecycle [11] Group 3: Market Adjustments - The life insurance industry is experiencing a structural reshuffle due to continuously declining interest rates, prompting companies to adjust product designs and sales strategies [12][14] - Recent adjustments in preset interest rates, such as the reduction from 2% to 1.5% by Tongfang Global Life, reflect a proactive market response to regulatory changes and economic conditions [12][13] - The overall trend indicates a shift towards a focus on core insurance functions and professional capabilities, marking a critical transition for the industry [14]

Core Viewpoint - The dividend insurance market is experiencing a resurgence, with many products showing an increase in dividend realization rates compared to the previous year, and some products exceeding 100% realization rates [1][2]. Group 1: Dividend Realization Rates - The overall dividend realization rates for dividend insurance products have increased, with many new products launched after October last year achieving rates of 100% or more [2][3]. - For instance, Xinhua Insurance reported that among its 71 dividend insurance products, 7 had realization rates exceeding 100%, and the average realization rate for products with historical performance was 57%, up from 19% in 2023 [2]. - Ping An Life announced that 11 out of 12 new dividend insurance products launched after September 2024 had realization rates of 100%, with one product reaching 114% [3]. Group 2: Impact on Returns - The realization rate directly affects the floating returns of dividend insurance and reflects the investment performance of insurance companies [4]. - The theoretical yield for products with a realization rate of 100% or higher is estimated to be between 3% and 3.2% [4]. - A specific product from a major insurance company is projected to have a realization rate of 114%, with combined fixed and dividend returns of 3.2% [4]. Group 3: Regulatory Environment - Recent regulatory guidance aims to enhance the sustainable operation of dividend insurance and protect consumer rights, introducing a tiered regulatory approach [6]. - Companies must justify proposed dividend levels based on their investment returns and past performance, particularly if they exceed certain thresholds [6]. - Analysts believe that this regulatory framework will lead to a differentiation in dividend realization rates among insurance companies, with stronger companies likely to offer higher rates [7].

Core Viewpoint - The article emphasizes the importance of long-termism and investment support in the management of participating insurance products, as mandated by the regulatory authority [1][17]. Summary by Sections Regulatory Requirements - The regulatory authority has issued guidelines requiring insurance companies to maintain stable operations and adhere to asset-liability management principles throughout the product lifecycle [1][17]. - Companies must not deviate from the actual asset-liability and investment income situations [1]. Dividend Realization Rate - The dividend realization rate reflects the actual benefits received by policyholders and enhances transparency in insurance company disclosures [1]. - Starting in 2023, insurance companies are required to disclose their dividend realization rates on their official websites [1]. Calculation of Dividend Realization Rate - The article provides a formula for calculating the customer yield, which includes both guaranteed and floating dividends [2]. - Factors influencing the dividend realization rate include the sales demonstration rate, which is based on long-term investment expectations [3][5]. Market Environment Impact - In the current low-interest-rate environment, major insurance companies have reduced their demonstration rates to 3.5% to reflect anticipated long-term returns [5]. - The article notes that lower demonstration rates can lead to higher dividend realization rates under certain conditions [5][6]. Long-term Perspective - A long-term view of the dividend realization rate is essential, as it better reflects an insurance company's ability to deliver on its promises over time [9]. - Many companies disclose multi-year dividend realization rates to provide a clearer picture of their long-term performance [9]. Customer Yield Analysis - The article discusses how to derive customer yield from the dividend realization rate, indicating that customer yield is expected to be between 3.0% and 3.2% for major insurers in 2024-2025 [15][16]. - The customer yield from participating insurance products has consistently outperformed bank wealth management products from 2020 to 2023 [16]. Future Outlook - The sustainability of dividend levels is tied to the long-term investment capabilities of insurance companies, which must be evaluated against their operational stability and risk ratings [19][20]. - The article concludes that the assessment of an insurance company's dividend strength should consider long-term yield, investment returns, solvency ratios, and overall operational health [19][20].