Core Viewpoint - The implementation of new accounting standards in the life insurance industry by 2026 will lead to revolutionary changes in financial statements, breaking the traditional profit recognition smoothness and introducing a more transparent profit recognition model that reflects the economic substance of contracts [1]. Group 1: Contractual Service Margin (CSM) - Contractual Service Margin (CSM) represents the difference between the present value of expected future cash inflows (mainly premiums) and expected future cash outflows (including claims, expenses, investment management costs, and risk adjustments) at the initial recognition of a group of insurance contracts with similar risk characteristics [2][3]. - CSM serves as a "profit pool" or "water reservoir" that insurance companies accumulate in advance for future services, measured at initial recognition and listed on the balance sheet, but not yet realized as profit [3]. Group 2: CSM Amortization - CSM amortization refers to the process of gradually transferring amounts from CSM to profit and loss as the insurance company continues to provide insurance coverage to policyholders, reflecting the accounting principle of matching [3][5]. - The CSM amortization amount constitutes a significant part of the insurance company's current "insurance service revenue," effectively converting "unrealized" profits on the balance sheet into "realized" profits on the income statement [3]. Group 3: CSM Amortization Ratio - The CSM Amortization Ratio is introduced to measure the speed at which different insurance companies release profits, calculated as the ratio of CSM amortization to the CSM amortization basis [5][6]. - A higher amortization ratio indicates a greater proportion of insurance services provided during the period relative to the entire service period, leading to a larger proportion of previously accumulated profits being recognized [8]. Group 4: Industry Insights - The differences in amortization ratios among listed insurance companies provide insights into their business structures, profit models, financial strategies, and long-term development paths [12]. - As of the second quarter of 2025, the CSM for seven listed insurance companies was 2.2612 trillion yuan, with CSM amortization of 98.2 billion yuan, resulting in an amortization ratio of 4.2% [8].