Core Viewpoint - The article discusses the implementation of the second phase of the solvency regulation (偿二代二期) for insurance companies in China, focusing on the calculation and significance of future policy earnings and remaining margins as key indicators of the operational status of life insurance companies [1]. Group 1: Future Policy Earnings and Remaining Margins - The future policy earnings, introduced under the second phase of solvency regulation, can be derived using specific formulas, which help in understanding the remaining margins of profitable life insurance companies [2][3]. - The difference between accounting reserves and solvency reserves is termed ACCIF, representing the contribution of existing policies to actual capital. For most small and medium-sized life insurance companies, future policy earnings equate to ACCIF [3]. - By the end of 2024, only 27 life insurance companies are expected to have reported three consecutive years of profitability under tax standards, with specific companies like 人保寿险 failing to meet this criterion [5]. Group 2: Analysis of Remaining Margins - The article identifies four main reasons for a decline in future policy earnings: high proportion of participating insurance, increased comprehensive premiums, lower continuation rates for high future earnings products, and adjustments in actuarial assumptions that lower accounting reserves [9]. - The remaining margin's calculation under the current CGAAP is locked, and changes in the present value of amortization carriers are minimally affected by the 750-day curve changes [10]. - The operational deviations, excluding policy cancellations, do not impact the remaining margins of existing policies, while mortality rate deviations have a negligible effect [12]. Group 3: Impact of Surrender Rates on Remaining Margins - Different companies have varying assumptions regarding surrender rates for mainstream products, significantly affecting their remaining margins [14]. - For example, a comparison of surrender rates of 1% versus 5% shows that the remaining margins can be nearly doubled under lower surrender rate assumptions [15]. - Some companies have accumulated considerable remaining margins through the sale of low-priced long-term critical illness insurance, but their claims ratios have exceeded pricing assumptions, leading to potential future losses [16]. Group 4: Remaining Margins Data - The remaining margins for major life insurance companies are presented, showing fluctuations from 2022 to 2024. For instance, 平安人寿's remaining margin is projected to decrease from 8,944 million in 2022 to 7,890 million in 2024, a decline of 1,054 million [17][19].

Core Viewpoint - The article discusses the implementation of the second phase of the solvency regulatory framework in China's insurance industry, focusing on the concept of future policy surplus as a key indicator of a company's future profitability [1][2]. Group 1: Future Policy Surplus - The future policy surplus is introduced under the second phase of solvency regulations and is crucial for assessing a company's future profitability [1]. - The future policy surplus is defined as the difference between accounting reserves and solvency reserves, adjusted for potential tax provisions and cash value guarantees [2]. - As of 2024, the future policy surplus for 66 insurance companies is projected to be 2.26 trillion, accounting for 8.8% of total assets, a decrease of approximately 150 billion from the end of 2022 [14]. Group 2: Impact of Accounting Standards - Starting in 2023, insurance companies began implementing the new accounting standard IFRS 17, which affects how insurance reserves are reported [3]. - The article highlights the importance of consistency in reporting deferred tax liabilities (DTL) and actual capital across different accounting standards [7][8]. - Companies that do not maintain consistency in their reporting may face challenges in validating their solvency reports [9]. Group 3: Analysis of Companies - The article provides a detailed analysis of various insurance companies, noting that the future policy surplus varies significantly among them, with some companies like AIA Life exceeding 15% of total assets [14]. - The article identifies that companies with a high proportion of participating insurance products tend to have lower future policy surplus compared to traditional insurance products [16]. - The future policy surplus for major players like China Life and Ping An has shown a noticeable decline, attributed to their historical focus on participating insurance products [15]. Group 4: Factors Influencing Future Policy Surplus - The decline in future policy surplus can be attributed to several factors, including a high proportion of participating insurance, adjustments in risk premiums, and changes in actuarial assumptions [19]. - Conversely, an increase in future policy surplus may result from a lower proportion of participating insurance and the successful generation of new business [19][22]. - The article emphasizes that the future policy surplus is a critical indicator but does not fully reflect a company's overall asset-liability management (ALM) status [16].