Core Viewpoint - The China Insurance Industry Association has lowered the research value for the maximum guaranteed interest rate for ordinary life insurance products to 1.9%, a decrease of 9 basis points from the previous quarter's 1.99% [1][2][4] Group 1: Research Value Trends - The decline in the research value has been narrowing over the past three quarters, with the initial value in January being 2.34%, followed by 2.13%, 1.99%, and now 1.9% [2][4] - The current research value is considered to be in line with expectations, as stated by analysts [2][4] Group 2: Regulatory Framework - According to the regulatory notice, if the maximum guaranteed interest rate for current ordinary life insurance products exceeds the research value by 25 basis points for two consecutive quarters, a downward adjustment must be made [2][6] - The current maximum guaranteed interest rate is 2%, which is still 15 basis points above the research value, indicating that a downward adjustment is not imminent [6] Group 3: Market Conditions and Predictions - Analysts suggest that the stability of long-term interest rates since early 2025 has contributed to the narrowing decline in the research value [4][7] - Predictions indicate that if current interest rates remain stable, the research value for the end of 2026 could be around 1.87%, which would not trigger the regulatory threshold for adjustment [7]

Core Viewpoint - The current predetermined interest rate for ordinary life insurance products is set at 1.99%, triggering a downward adjustment in the maximum allowable rates for various insurance products [1][3][7]. Summary by Sections Predetermined Interest Rate Adjustments - The China Insurance Industry Association announced that the maximum predetermined interest rates for new insurance products will be adjusted: ordinary life insurance to 2.0%, participating insurance to 1.75%, and universal insurance to a minimum guaranteed rate of 1.0% [1][7]. - As of August 31, 2025, insurance companies will no longer accept applications for products with rates exceeding these new maximums [2][8]. Historical Context and Mechanism - The predetermined interest rate research value has been linked to market interest rates, including the 5-year loan market quotation rate (LPR) and 10-year government bond yields [3][5]. - The recent adjustment marks a significant historical low for predetermined interest rates, with the previous values being 2.34% in January and 2.13% in April of the same year [3][5][7]. Market Reactions and Future Implications - Major insurance companies, including China Life and Ping An Life, have responded to the new research value by adjusting their product offerings accordingly [1][7]. - The insurance industry is expected to continue transitioning towards participating insurance products, as the 2% predetermined interest rate is seen as a critical threshold for sales performance [8][9].