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 [5]. Core Insights - The report emphasizes the need for a dynamic management mechanism for dividend levels in the insurance sector, aiming to prevent "involution-style" competition in dividend payouts. This is in response to regulatory guidance aimed at enhancing the sustainable operation of dividend insurance products [4]. - The establishment of a dual-track dynamic adjustment mechanism for dividend levels is expected to improve asset allocation capabilities and risk management within insurance companies, thereby enhancing their overall risk resilience and profitability [4]. - The report anticipates a significant reduction in the preset interest rate for insurance products, with a large-scale adjustment expected to begin in Q3 2025, which could stimulate policy sales [4]. Summary by Sections Investment Highlights - Stablecoins and policy catalysts are expected to boost the brokerage sector, with ongoing attention to related thematic investment opportunities [4]. - The optimization of the brokerage classification evaluation system is encouraged to enhance business efficiency and specialization [4]. - Recent regulatory changes in the classification of securities companies and enhanced supervision of dividend insurance are noted [4]. Regulatory Developments - The China Banking and Insurance Regulatory Commission issued guidelines to strengthen the linkage between asset and liability management in the insurance sector, emphasizing prudent determination of dividend levels [4]. - Companies are required to align their dividend levels with historical performance and capital strength, ensuring that proposed dividend levels do not exceed the average financial investment returns of the past three years [4]. Market Outlook - The report suggests that the life insurance liability transformation is ongoing, with a gradual reduction in workforce size and significant improvements in productivity [4]. - The "Nine Policies" initiative is expected to create a new starting point for the capital market, with a positive outlook for equity markets and a potential alleviation of interest margin loss risks due to the anticipated reduction in preset interest rates [4]. - The insurance sector is currently viewed as undervalued, presenting opportunities for strategic allocation, particularly in large listed insurance companies with strong competitive advantages [4].

Core Viewpoint - The regulatory body has issued guidelines to insurance companies to ensure sustainable dividend levels for participating insurance products, preventing excessive competition that could harm the industry's long-term health [1][2][3]. Regulatory Guidelines - The recent regulatory opinion emphasizes that insurance companies must carefully determine annual dividend levels based on actual asset-liability and investment income situations, avoiding arbitrary increases that lead to "involution" competition [1][2]. - Six specific scenarios have been outlined where insurance companies must justify the necessity, reasonableness, and sustainability of proposed dividend levels before implementation [3]. Industry Context - In a low-interest-rate environment, participating insurance products have become a focal point for insurance companies, but the sales difficulty and competition remain high [2]. - The regulatory opinion aims to prevent short-term consumer attraction through inflated dividends, which poses long-term sustainability challenges for products [2]. Financial Metrics - The average financial investment return for the past three years in the life insurance sector is 3.20%, which serves as a benchmark for evaluating proposed dividend levels [3]. - The regulatory body will enhance data monitoring and impose penalties for non-compliance, including regulatory interviews and score deductions [3]. Cost Management - The regulatory opinion continues the trend of reducing liability costs to mitigate interest rate risk, with previous adjustments allowing for lower guaranteed rates on universal insurance products [4]. - Major companies have already begun to lower the dividend realization rates for participating insurance products since last year, with specific caps set for different company sizes [4]. Future Projections - The average monthly pressure on the predetermined interest rate research value is approximately 4 basis points, with expectations of further declines in the coming months [6]. - A recent product launch by a joint venture life insurance company has introduced a participating product with a predetermined interest rate of 1.5%, marking a significant shift in the market [6].