Core Viewpoint - The predetermined interest rate for personal insurance products has been updated to 1.89%, marking a fourth consecutive decline, but the rate of decrease is narrowing, indicating a stabilization trend in the market [2][3]. Group 1: Predetermined Interest Rate Updates - The China Insurance Industry Association announced the latest predetermined interest rate for personal insurance products as 1.89% on January 20, 2025, following a quarterly release schedule [2]. - The predetermined interest rates for the previous quarters were 2.34%, 2.13%, 1.99%, and 1.90% for January, April, July, and October 2025, respectively, showing a consistent downward trend [2]. - The decline in the predetermined interest rate is attributed to the stabilization of the ten-year government bond yield, which currently hovers around 1.8% [3]. Group 2: Market Dynamics and Predictions - Analysts expect the downward adjustment of the predetermined interest rate to continue to narrow due to the stabilization of long-term interest rates and the recovery of capital markets since September 2024 [6][9]. - The insurance industry is likely to maintain the current level of predetermined interest rates through 2026, as the ten-year government bond yield is not expected to drop below 1% [8][9]. - The relationship between the predetermined interest rate and the ten-year government bond yield is crucial, as the latter provides a support level for the former, especially in light of recent market conditions [8][9].

Core Viewpoint - The current research value of the predetermined interest rate for ordinary life insurance products has dropped to 2.13%, marking the first decline below 2.25% [2][3]. Group 1: Predetermined Interest Rate Research Value - The predetermined interest rate research value for ordinary life insurance products is now 2.13% [2][3]. - The maximum predetermined interest rate for traditional insurance products remains at 2.5%, which does not require adjustment at this time [2][9]. - The predetermined interest rate research value has decreased from 2.34% earlier this year, exceeding the 25 basis points threshold compared to the latest value [8]. Group 2: Regulatory Framework and Adjustments - A notification from the Financial Regulatory Bureau established a mechanism linking predetermined interest rates to market rates, with the maximum predetermined interest rate set at 0.25% increments [4]. - If the maximum predetermined interest rate for ordinary life insurance products exceeds the research value by 25 basis points for two consecutive quarters, it must be adjusted downwards within two months [5]. - Conversely, if the maximum predetermined interest rate is below the research value by 25 basis points for two consecutive quarters, it may be adjusted upwards, but not exceeding the research value [6]. Group 3: Industry Response and Future Outlook - Insurance companies are advised to closely monitor macroeconomic conditions and the trends of the predetermined interest rate research value to adjust product pricing accordingly [11]. - If the next quarter's research value remains below 2.25%, the maximum predetermined interest rate will be reduced by at least 25 basis points [10].