China Securities Co., Ltd.: The insurance industry introduces the "New Ten National Policies", leading the industry into a new era of high-quality development.

The release of the third "State Ten Measures" policy in the insurance industry marks the arrival of a new era of high-quality development in the insurance industry. By comparing with the previous two "State Ten Measures" policies and considering the current situation of the insurance industry, we can understand the "new State Ten Measures" from the perspective of five key words: strict supervision, classification, quality improvement, patient capital, and endogenous development. In terms of impact, the Matthew effect of leading insurance companies is expected to strengthen, and insurance businesses such as pension insurance and inclusive insurance focusing on the "five major areas" are expected to continue receiving policy support, further solidifying the natural advantage of insurance funds as patient capital. Event On September 11, 2024, the State Council issued the "Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry" (State Development [2024] No. 21) (referred to as the "new State Ten Measures"), once again promoting the development of the insurance industry in a top-down manner. This is the third top-level design policy document issued by the State Council for the insurance industry, following the issuance of the "Opinions on Reform and Development of the Insurance Industry" and the "Opinions on Accelerating the Development of the Modern Insurance Service Industry" in 2006 and 2014, respectively. This article analyzes the important content and signals conveyed by the insurance "new state ten measures" through five key words: 1. Strict supervision and risk prevention. The "new State Ten Measures" emphasizes "strengthening supervision, preventing risks, and promoting high-quality development as the main line", coordinating and deploying around these three central tasks. The strict standards cover the entire chain including institution admission, executive appointment, shareholder qualifications, business operations, and employees. 2. Classification. Business classification management is a method of differentiated supervision by regulatory authorities based on the nature of insurance business, risk characteristics, and risk management capabilities of insurance companies. Based on the risk levels and management levels of insurance companies, stronger regulatory measures will be taken for companies with higher risks. The classification management measures are expected to strengthen the dominant position of leading insurance companies. 3. Quality improvement. The new "State Ten Measures" mainly focus on new product types such as catastrophe insurance, the third pillar pension insurance, health insurance, inclusive insurance, and floating income insurance, reflecting efforts to expand coverage and improve service quality. 4. Patient capital. Insurance funds have characteristics such as long investment periods, low cost of funds, and large fund size, making them typical patient capital that plays an important role in serving the real economy. 5. Endogenous development. With insurance companies emphasizing high-quality development, it is necessary to improve operating efficiency and enhance the capability for internal source capital supplementation, rather than overly relying on external capital supplementation, to cope with changes in interest rate environment and demographic structure. In summary 1. Strict supervision and management On September 11, 2024, the State Council issued the "Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry" (State Development [2024] No. 21) (referred to as the "new State Ten Measures"), once again promoting the development of the insurance industry in a top-down manner. The "new State Ten Measures" aims to guide the insurance industry to focus on "strengthening supervision, preventing risks, and promoting high-quality development" in the next five to ten years, fully leveraging the role of the insurance industry as an economic stabilizer and social stabilizer. This is the third time at the national level that comprehensive arrangements have been made for the development of the insurance industry. Before this, in 2006 and 2014, the State Council issued the "Opinions on Reform and Development of the Insurance Industry" and the "Opinions on Accelerating the Development of the Modern Insurance Service Industry," which greatly promoted the development of the insurance industry. Compared with the previous two versions, this year's "new State Ten Measures" put forward stricter requirements in terms of regulation, emphasizing the need to strictly adhere to regulatory measures to ensure that regulation is robust, comprehensive, and prevents systemic risks. At the same time, the "new State Ten Measures" also focus more on the high-quality development of the insurance industry. (1) Making strengthening supervision, preventing risks, and promoting high-quality development the main line The "new State Ten Measures" emphasizes "strengthening supervision, preventing risks, and promoting high-quality development as the main line", coordinating around these three central tasks, and proposing ten opinions. This not only supplements and improves the existing regulatory system but also provides clear guidance for the future development direction of the insurance market. 1. Strengthening supervision and preventing risks are placed in a more prominent position, and their proportion in the document has increased. After years of rapid growth, the insurance industry has entered a period of transformation. Many problems hidden during the previous rapid development phase are gradually emerging. As pointed out in the Central Financial Work Conference, "Various contradictions and problems in the financial field are intertwined and mutually influencing, some of which are still prominent. There are still many hidden risks in economic and financial risks, the efficiency of financial services for the real economy is not high, financial chaos and corruption issues are still rampant, and financial supervision and governance capabilities are weak." The "new State Ten Measures" provides a deep analysis of the current development status and future trends of the insurance industry, based on which it puts forward more comprehensive and stringent requirements, greatly enhancing the importance of strengthening supervision and preventing risks. This is aimed at providing necessary guarantees to promote the high-quality development of the insurance industry, reflecting a significant shift in the development philosophy of China's insurance industry. Firstly, from the overall layout perspective, compared with the previous two "State Ten Measures" which placed the opinions on strengthening supervision and preventing risks in the eighth/ninth articles, the "new State Ten Measures" put the opinions on strengthening supervision and preventing risks at the forefront, in the second to fifth articles after the general opinions, and the relevant content also increased significantly. From the pre-approval review, to continuous supervision during operations, and to the serious crackdown on illegal activities afterwards, including emphasizing the establishment of a risk-based regulatory system, continuous prevention and resolution of risk hazards, and prudently promoting risk disposal, strengthened guidance on supervision and risk prevention has been enhanced throughout the entire process. This not only highlights the importance of insurance industry regulation but also reflects the determination of the national level to prevent and resolve risks in the insurance industry. Secondly, in terms of the sequencing of basic principles, the "State Ten Measures" in 2014 first mentioned "adhering to reform and innovation, expanding opening up," and then "adhering to perfect regulation, preventing risks," while the "new State Ten Measures" places "adhering to strict supervision" before "adhering to deepening reform," indicating that China attaches great importance to strict supervision and risk prevention in the insurance industry.Translating into The degree of improvement has been significantly enhanced, making it a necessary guarantee to promote the high-quality development of the insurance industry.Ultimately, from an economic perspective, compared with the 2006 "Ten National Measures" which positioned the insurance industry as an economic "booster" and the 2014 "Ten National Measures" which positioned it as an efficient engine for promoting economic quality, efficiency, and upgrading, this year's "New Ten National Measures" repositions the insurance industry as an economic "shock absorber." This shift reflects a focus on the stability of the insurance industry, emphasizing its critical role in the economic security net, social security net, and disaster prevention and control network. The insurance industry not only needs to promote economic development but also play a role as a shock absorber and stabilizer in the face of economic fluctuations and social risks, ensuring the smooth operation of the socio-economic system. 2. Promoting the insurance industry's transition to high-quality development Compared with the previous two "Ten National Measures" which focused on "development," the "New Ten National Measures" emphasizes the "high-quality development" of the insurance industry. This is clearly reflected in the first requirement of the "New Ten National Measures," which emphasizes a deep understanding of the main connotations of high-quality development in the insurance industry. Looking back at the two previous "Ten National Measures" for the insurance industry, when the 2006 "Ten National Measures" was issued, the main contradiction faced by China's insurance industry was that its development speed lagged behind economic growth, making it difficult to adapt to domestic and international economic and social development trends. Therefore, the 2006 "Ten National Measures" focused on promoting development as its main goal, tending to relax policy restrictions and incentivize industry innovation. When the 2014 "Ten National Measures" were issued, the main contradiction facing China's insurance industry was being "big but not strong." Therefore, the 2014 "Ten National Measures" also emphasized promoting development but placed more emphasis on improving the market maturity and penetration rate of the insurance industry, specifically highlighting value indicators such as increasing insurance depth and density. These two policy documents significantly promoted the growth of China's insurance industry, with key development data such as insurance density, insurance depth, premium income, and total insurance assets all showing a steady upward trend. As China enters a new development stage, the challenges and tasks facing the insurance industry are continuously changing. Currently, the development of the insurance industry has shifted from simple scale expansion to the improvement of quality and efficiency, which is precisely the core meaning of the "New Ten National Measures" emphasizing high-quality development. The guiding direction of the "New Ten National Measures" is in line with the concept put forward in the Central Financial Work Conference that "high-quality development is the primary task for comprehensively building a modern socialist country," emphasizing that the financial industry, including the insurance industry, needs to provide higher-quality services for economic and social development. The "New Ten National Measures" will help the insurance industry better serve national strategies, support the development of key areas such as technological innovation, rural revitalization, and green low-carbon industries, and also promote the optimization of the insurance industry's structure and enhancement of its capabilities. Guided by the "New Ten National Measures," the insurance industry will pay more attention to risk management and internal control, improve its solvency and service levels, and achieve sustainable development. At the same time, by strengthening supervision and rectifying illegal activities, the market order of the insurance industry will be further regulated, providing strong guarantees for the healthy and stable development of the industry. (II) Strictly control access to the insurance market The "New Ten National Measures" set stricter requirements for the access mechanism to the insurance market, consistent with the regulatory trend in the insurance industry in recent years. In February 2024, the Financial Institutions Access Office of the National Financial Regulatory Bureau emphasized the need to strictly adhere to the access standards and requirements of financial institutions, study ways to raise the threshold for the entry of bank and insurance institutions, and continuously strengthen the foundation of prudent supervision of financial institutions. Specifically, in terms of the content of the "New Ten National Measures," Firstly, strict approval of insurance institutions. The "New Ten National Measures" propose to "strictly approve the establishment of new insurance institutions in accordance with the law. Optimize the regional and hierarchical layout of institutions, steadily and orderly reduce quantity while improving quality. Promote hierarchical management of business." This will raise the threshold for access to the insurance market, conducive to improving the overall quality of the insurance industry. The strict control of insurance market access in the "New Ten National Measures" will raise the entry barriers for the insurance market, beneficial to enhancing the overall quality of the insurance industry, optimizing the competitive landscape of the insurance market, promoting the high-quality development of the insurance industry, and highlighting the competitive advantages of leading insurance companies. Secondly, strict examination of qualifications of management personnel. The "New Ten National Measures" propose to "improve the examination mechanism for the qualifications of directors, supervisors, and senior management personnel of insurance institutions. Strengthen supervision of the performance of directors and managers. Establish a negative information database for key personnel appointments, increase accountability for negligence, and prevent 'diseased migration.'" This will promote the improvement of corporate governance and professional levels of management teams in insurance companies. Through rigorous examination of management personnel, it will help establish a more sound corporate governance structure, ensure the scientificity and transparency of company decisions, reduce internal control risks, and ensure that the management teams of insurance companies possess the necessary professional knowledge and experience to enhance the operational efficiency and management level of insurance companies. Thirdly, strict review of shareholder qualifications. The "New Ten National Measures" propose to "improve the rules for equity management in insurance companies. Conduct thorough examinations of shareholder qualifications, capital sources, and conduct. Strictly prohibit enterprises with violations of cross-industry operation, excessively high leverage, serious dishonest conduct, and major violations of laws and regulations from becoming main shareholders or actual controllers of insurance institutions. Establish a 'blacklist' system for shareholders and actual controllers, increase efforts to remove major violators of laws and regulations." This will help reduce risks in the insurance industry and ensure the sound operation of insurance institutions. By strictly reviewing shareholder qualifications, especially conducting thorough examinations of the qualifications, capital sources, and conduct of major shareholders or actual controllers, it will help ensure clear and legal ownership structures in insurance institutions, prevent illegal funds from entering the insurance industry, prevent enterprises with serious dishonest conduct and major violations of laws and regulations from becoming major shareholders or actual controllers of insurance institutions. By establishing a "blacklist" system for shareholders and actual controllers, regulatory authorities can increase efforts in removing major violators of laws and regulations, thereby purifying the market environment. (III) Crack down on insurance illegal activities The "New Ten National Measures" further emphasize the importance of cracking down on insurance illegal activities. Specifically, it is necessary to focus on key areas and weak links. Regulatory authorities will intensify inspection efforts to severely crackdown on behaviors that seriously disrupt market order, harm consumer rights, and have a negative societal impact. For improper gains by shareholders or key personnel, a system for recovery will be established in accordance with the law. If you need a continuation of the translation, please let me know.The responsible person for illegal and non-compliant behavior will bear corresponding consequences. At the same time, a post-recovery mechanism for risk liability will be established for risks caused by illegal and non-compliant behavior.One is to increase the intensity of market regulation. The policy clearly requires strict crackdown on violations such as shareholders or actual controllers holding shares in violation of the law, using non-self-owned funds, illegally interfering in company management activities, and illegally occupying funds. It is strictly forbidden to invest in industries that are unrelated to the insurance industry. Sales behaviors are regulated, and actions such as misleading sales and extracting fees are strictly investigated. Insurance fraud crimes and illegal agent termination behaviors are strongly cracked down on to protect consumer rights. Second is to optimize the administrative penalty mechanism. Specify the penalty standards for various illegal behaviors, strictly implement the principle of full punishment, improve accuracy and efficiency in penalties. According to penalty documents issued by the national financial regulatory authorities and local financial regulatory authorities, in the first half of 2024, the total amount of fines imposed on the insurance industry and intermediaries increased significantly to about 190 million yuan, a year-on-year increase of over 20%, with a total of over 1,400 penalty documents issued. Additionally, personnel penalties are also strict, with 31 individuals facing maximum business ban penalties, including 16 individuals facing lifelong business bans, a significant increase compared to the same period last year. Property insurance companies are the hardest-hit area in terms of penalties, with fines exceeding 120 million yuan, accounting for about 60% of the total fines. In terms of violations, whether it is property insurance companies or life insurance companies, the most common reason for penalties is falsification, such as document falsification and business falsification. These data indicate that despite the strengthening of regulatory measures, the insurance industry still has a long way to go in terms of compliance. With the release of the "New National Ten Articles", regulatory authorities are expected to maintain a strong regulatory stance towards the insurance industry, strengthen supervision of the compliance of insurance institutions, crack down on illegal activities, and ensure fair competition in the insurance market and the protection of consumer rights. Insurance companies are expected to actively respond to changes in regulatory policies, strengthen internal compliance management, ensure the legality and compliance of business operations. Additionally, insurance companies will enhance consumer rights protection, improve service quality, increase customer satisfaction, to enhance market competitiveness and brand image. 2. Grading Classification (1) Promoting business classification management The "New National Ten Articles" emphasizes the need to "promote business classification management". Business classification management is a method of regulating insurance companies' business scope according to the nature of their business, risk characteristics, and risk management capabilities, and implementing differentiated supervision. This management method helps regulate the business scope management of insurance companies, establish a sound insurance market access and exit mechanism, promote professional and differentiated development of the insurance industry, guide insurance companies to operate intensively and finely. Through business classification management, regulatory authorities can more accurately identify and respond to various risks, while also encouraging insurance companies to develop and provide more diversified insurance products and services according to their own characteristics and market positioning. Additionally, business classification management helps drive insurance companies to strengthen internal management and improve risk management capabilities. Insurance companies need to reasonably determine their business development strategies and product innovation directions according to their own risk tolerance and business characteristics in order to maintain a competitive advantage in the fierce market competition. According to the "Measures for Business Scope Classification Management of Insurance Companies" issued by the former China Insurance Regulatory Commission in May 2013, insurance companies' business scope is divided into basic business and extended business based on the nature and risk characteristics of insurance businesses. New insurance companies can only apply for basic businesses and must meet corresponding entry conditions. The "New National Ten Articles" further emphasizes the importance of strict control over insurance market access, indicating that future approval of new insurance companies will be more stringent. (2) Improving the supervision and evaluation system of insurance institutions The "New National Ten Articles" emphasizes the need to "strictly supervise insurance institutions continuously, strengthen grading and classification supervision, and improve the supervision and evaluation system of insurance institutions, and enhance the application of evaluation results". This means that regulatory authorities will implement more detailed and differentiated supervisory measures based on factors such as the risk situation, operating characteristics, and systemic importance of insurance institutions. Currently, regulatory authorities have conducted rating management for life insurance companies and insurance asset management companies, and in the future, the management mode of establishing and improving the supervision and evaluation system may cover all insurance institutions. 1. Life insurance companies The China Banking and Insurance Regulatory Commission issued the "Measures for the Supervision and Rating of Life Insurance Companies" on March 18, 2024, which clearly outlines the method of supervising and rating life insurance companies, including risk monitoring and evaluation in six dimensions: corporate governance, business operations, capital utilization, asset-liability management, solvency management, etc. The supervision evaluation includes evaluating single-dimensional risk level, rating the comprehensive risk level, and adjusting ratings in special circumstances. The rating results will be used to guide the allocation of regulatory resources and the implementation of regulatory policies to promote the stable development of the insurance industry. The "Measures" reflect the characteristics of risk grading and management grading. For high-risk companies, stronger regulatory measures are taken, thus top insurance companies that were previously in good operation are expected to further strengthen their industry position, and the Matthew effect is expected to be enhanced. For example, the "Measures" propose that for companies with a regulatory rating of 3, the frequency and depth of non-site supervision and on-site inspections should be appropriately increased to urge companies to control risks in areas with higher risk and weak management, and to take regulatory measures in accordance with the law; for companies with a regulatory rating of 4, in addition to the above-mentioned regulatory measures, measures such as ordering rectification within a time limit, requiring an increase in capital, limiting business scope, restricting dividend distribution to shareholders, limiting the establishment of branch offices, ordering a halt to accepting new business, restricting shareholder rights should be taken according to the circumstances; for companies with a regulatory rating of 5, in addition to the above-mentioned regulatory measures, when necessary, a risk disposal plan should be formulated and implemented. Depending on the situation, restructuring, takeover, or market exit may be arranged according to the law. In addition, the "Measures" exhibit a combination of clarity and flexibility. In the rating of comprehensive risk levels, the "Measures" clearly stipulate six evaluation dimensions and their respective weightings, and based on the scores derived from the weightings, a clear risk rating is assigned. On the other hand, the "Measures" set special circumstances for adjusting ratings. For example, if there are issues with corporate governance and capital utilization, additional monitoring and supervision measures are taken.If the risk level of either of these two is high, the comprehensive risk level should be raised by one level. The "Rating Method" adjusts ratings in special circumstances, focusing on the financial performance of insurance companies such as solvency, liquidity, effective assets, net assets, as well as corporate governance, such as compliance, related transactions, etc.The "Rating Method" reflects the emphasis on green finance and inclusive finance. In addition to the six evaluation dimensions for comprehensive risk level rating, the "Rating Method" sets "performance of environmental, social, and governance (ESG) responsibilities" as a special bonus item, giving appropriate bonus points to life insurance companies that engage more in green insurance and inclusive insurance. 2. Insurance asset management companies According to the "Interim Measures for the Supervision and Rating of Insurance Asset Management Companies" issued by the former China Banking and Insurance Regulatory Commission in January 2021, regulatory authorities evaluate the overall situation of insurance asset management companies based on the relevant information and industry data obtained through daily supervision and implement classified supervision of insurance asset management companies. The elements of supervision rating for insurance asset management companies include corporate governance and internal control, asset management capabilities, comprehensive risk management, transaction and operational support, and information disclosure. The supervision rating results for insurance asset management companies are divided into four categories: A, B, C, and D. Regulatory authorities treat different categories of insurance asset management companies differently in terms of market access, regulatory measures, and allocation of regulatory resources based on different supervision rating results. (Three) Promoting classified management of insurance sales personnel The "New Ten Measures" propose to "promote classified management of insurance sales personnel". Under this policy guidance, the insurance industry will move towards improving the professional level of sales teams, which is expected to lead to a continuous improvement in the per capita performance of insurance companies. Previously, in September 2023, the China Banking and Insurance Regulatory Commission issued the "Measures for the Management of Insurance Sales Behavior", requiring insurance companies and insurance intermediaries to establish a qualification-based classification management system for insurance sales capabilities based on professional knowledge, sales ability, integrity level, and conduct of insurance sales personnel, and to classify insurance sales personnel accordingly. In the background of classified management of sales personnel, the performance of insurance companies will no longer solely depend on the expansion of sales teams, but will focus more on improving the professional abilities of sales personnel and establishing long-term trust relationships with clients. This means that the professional skills and service quality of sales personnel will become key factors in the competition among insurance companies. Three. Expanding coverage and improving quality The "New Ten Measures" mainly focus on catastrophic insurance, the third pillar of pension insurance, health insurance, inclusive insurance, and floating income insurance, reflecting the expansion of coverage and the improvement of service quality. From the point of departure, insurance plays a role in social security, expanding the coverage of the insurance industry is conducive to filling the blank spots and weaknesses in people's livelihood security, promoting the high-quality development of the insurance industry is conducive to improving people's livelihood security, and it embodies the comprehensive implementation of the spirit of the 20th National Party Congress and the Second and Third Plenary Sessions of the 20th Central Committee, and adheres to the people-centered position in financial work. In terms of expanding coverage, the catastrophic insurance mentioned in the "New Ten Measures" addresses the protection needs arising from frequent natural disasters in China, the third pillar pension insurance addresses the pension pressure arising from the aging population in China, health insurance further supplements basic medical insurance, effectively addressing the issues of "difficult access to medical care" and "expensive medical care", and inclusive insurance focuses on vulnerable groups, expanding the coverage, areas, and groups of insurance services, and striving to provide insurance services that are widely covered, fair and accessible, reasonable premiums, and effective protection to the people. In terms of improving service quality, firstly, it is important to actively innovate, such as exploring the establishment of a multi-channel and multi-level catastrophic insurance protection mechanism, researching and exploring catastrophic bond... Property insurance products for courtyard. The "Guiding Opinions" also support insurance companies to provide exclusive inclusive insurance products and services to areas with insufficient social insurance coverage. In principle, the rates of these products should be lower than those of other insurance products under equivalent conditions in the market, to ensure the affordability of insurance services.On the other hand, it is necessary to improve the quality and efficiency of inclusive insurance services. Guiding various insurance companies to provide differentiated services, improving the management mechanism of inclusive insurance, enhancing the quality of inclusive insurance services, and standardizing inclusive insurance agents and co-organizers. When insurance companies participate in government-organized guarantee projects through exclusive inclusive insurance methods, they can appropriately simplify insurance procedures, claims processes, and documentation requirements. Support insurance companies to negotiate with relevant departments to establish profit-sharing mechanisms, implement dynamic adjustments to fees, and achieve sustainable operations. Strengthen regulatory guidance, continuously improve support measures in line with the development needs of exclusive inclusive insurance. Insurance companies should enhance the digitization and intelligence level of services, provide aging-friendly and barrier-free services, and ensure accessibility of insurance services. 2. Improve inclusive insurance evaluation indicators Under the framework of the "New National Ten Articles," improving inclusive insurance evaluation indicators is one of the key measures to promote the high-quality development of the insurance industry. This involves two core aspects: First, inclusion in operational performance assessments. The "Guiding Opinions" encourage insurance companies to incorporate the development of inclusive insurance business and the fulfillment of social responsibilities into their operational performance assessment systems. Especially for large insurance companies, the weight of inclusive insurance business in their assessments should not be less than 5%, reflecting the regulatory authorities' increased emphasis on inclusive insurance business. Through this approach, insurance companies will pay more attention to the development of inclusive insurance products and the provision of services, thereby better serving different groups in society, especially vulnerable groups such as farmers and urban low-income earners. Second, implement differentiated supervision. Regulatory authorities are studying the inclusion of inclusive insurance in the evaluation system of insurance companies, which means implementing differentiated supervision for inclusive insurance. Differentiated supervision will adopt more customized regulatory measures based on the specific performance and risk situation of insurance companies in the field of inclusive insurance. This not only helps improve regulatory efficiency but also encourages insurance companies to innovate products and services while controlling risks to better meet the insurance needs of different groups. Through these measures, it is expected to promote insurance companies to provide broader insurance coverage, improve service quality, and ensure the affordability and effectiveness of insurance products. This will help build a more inclusive and sustainable insurance market, better serving the needs of social and economic development. Patience Capital The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Promoting Modernization with Chinese Characteristics" issued at the Third Plenary Session of the Twentieth Central Committee of the Communist Party of China stated, "Encouraging and regulating the development of angel investment, venture capital, private equity investment, and better play the role of government investment funds, and develop patience capital." Insurance funds have the characteristics of long investment period, low cost of funds, and large scale of funds, making them a typical form of patience capital. Fully leveraging the role of insurance funds as patience capital is not only conducive to achieving high-quality development of the insurance industry but also holds significant significance for the development of the "Five Major Tasks." The New "National Nine Articles" points out, "Optimize the environment for equity investment policies for insurance funds, implement and improve the performance evaluation methods of state-owned insurance companies, and better encourage long-term equity investments." The current "New National Ten Articles" states, "Leverage the advantages of insurance funds for long-term investments. Cultivate genuine patience capital to promote the circulation of funds, capital, and assets. Increase investments in strategic emerging industries, advanced manufacturing, new types of infrastructure, and other areas to serve the development of new productive forces. Guide insurance funds to support technological innovation, venture capital, rural revitalization, and the development of green low-carbon industries." Since the beginning of this year, insurance funds have frequently entered the market through equity increases, becoming a strong force supporting the capital market. According to media reports, as of the end of the second quarter, insurance funds held 780 individual stocks in their top holdings (among the top ten largest circulating shareholders of the listed companies), with eight bank stocks among the top ten holdings. Among them, insurance funds increased their holdings in 256 individual stocks from the first quarter. Since the beginning of this year, insurance funds have sparked a "tender offer heat," with 11 tender offers for listed companies by insurance funds as of September 4th. Insurance funds not only strongly support the A-share market but also actively layout in the Hong Kong stock market. In terms of the industries in which the companies being tendered are located, they involve sectors such as transportation, utilities, consumption, and banking, with the targeted companies typically being high-dividend stocks. In the current context of relatively low valuations in the secondary market, investing in equity markets helps improve investment returns and reduce the risk of "interest spread losses." In addition, policies also encourage the development of patience capital by insurance funds: first, adjusting accounting policies, improving the performance evaluation methods of state-owned insurance companies, adjusting the assessment methods for operating efficiency indicators, and strengthening the evaluation of a three-year period and longer. On October 25, 2023, the Ministry of Finance issued a notice on "Guiding Insurance Funds for Long-Term Stable Investments and Strengthening the Long-Term Evaluation of State-Owned Commercial Insurance Companies," which strengthens the long-term evaluation of state-owned commercial insurance companies by extending the assessment period for insurance company ROE to three years and adjusting the evaluation method for operating efficiency indicators. The aim is to reduce the impact of short-term market fluctuations on the evaluation and rating of insurance companies, improve the performance scores and ratings of insurance companies, and thus enhance the enthusiasm of insurance funds to participate in the market. Second, on August 30, 2024, the State Council's regular meeting proposed, "To cultivate and expand patience capital such as insurance funds, remove institutional obstacles, improve evaluation mechanisms, and provide stable long-term investment for the capital market and technological innovation." Third, reducing multiple risk factors for insurance companies: on September 10, 2023, the China Banking and Insurance Regulatory Commission issued a notice on "Optimizing the Solvency Supervisory Standards for Insurance Companies," reducing the risk factor for the Shanghai and Shenzhen 300 Index from 0.35 to 0.3, for regular stocks listed on the Sci-Tech Innovation Board from 0.45 to 0.4, for unlisted equities of national strategic emerging industries, a risk factor of 0.4 is assigned. These measures together constitute an accounting policy system that supports the long-term investment of insurance funds, aiming to promote the positive role of patience capital such as insurance funds in the capital market through policy guidance and market mechanisms, thereby promoting the high-quality development of the capital market and stable growth of the real economy. Endogenous Development The current "New National Ten Articles" guide the insurance industry to better adapt to the current capital market background and enhance its sustainable development capabilities. First, as central interest rates decline, the People's Bank of China has continued to deploy reserve requirement ratio cuts and interest rate reductions in recent years, MLFInterest rates have been declining since the beginning of 2020, dropping from 0.95% to 0.75% currently. With the decrease in interest rates, the profit space of insurance companies' fixed-income assets has narrowed, leading to asset shortages and even potential interest rate losses. The "New Regulations on Insurers" guide insurance institutions to strengthen the coordination of asset-liability management, improve asset allocation and long-term investment capabilities, and enhance asset-liability linkage regulation. It also aims to improve interest rate transmission and liability cost adjustment mechanisms, guide the optimization of asset allocation structures, enhance cross-market and cross-cycle investment management capabilities, urge for clarifying the responsibilities of principals and trustees, strengthen full-process investment supervision, lawfully and compliantly use financial derivatives, and cautiously promote global asset allocation.One is the update of the new life table. At the beginning of 2024, the China Actuarial Association issued the "Chinese Life Insurance Industry Experience Life Table (2023) (Draft for Solicitation of Opinions)" to various insurance companies, starting to solicit opinions within the industry, and is expected to be implemented in 2024. The new life table has three significant changes. First, the mortality rate has decreased significantly, for example, in the pension business table, the mortality rate of the new life table is only about 80% of the old version, with a significant decrease in the mortality rate. Second, the overall life expectancy has increased by 2-3 years. According to the life table calculation of pension business, the life expectancy of males has increased from 82.63 years to 84.46 years, and the life expectancy of females has increased from 87.63 years to 90.08 years. Third, a new set of life tables exclusive to the Greater Bay Area has been added, with a lower mortality rate than the national version of the life table. The update of the life table reduces the death rate, which means that the death benefit payment of life insurance may be delayed or reduced, the premiums of life insurance products may decrease, and the extension of life expectancy will increase the number of pension recipients and the amount received, which may lead to an increase in the premium rates of pension insurance products. This "new ten regulations" provide important guidance for related insurance business. Second is to enhance internal capital supplementation capability. This "new ten regulations" point out, "improve operating efficiency, enhance internal capital supplementation capability. Broaden capital supplementation channels, improve capital supplementation regulatory system. Increase debt-based capital supplementation tools." According to the "China Insurance Industry Risk Assessment Report 2023," insurance companies currently face significant pressure for capital supplementation, mainly from internal capital supplementation and external capital supply. Factors such as insufficient profitability of insurance companies in recent years and limited external capital supply have increased the difficulty of capital supplementation. The report also points out that the decline in investment income of insurance companies in 2022 and the implementation of the "Regulation on Capital Adequacy of Insurance Companies (II)" have brought new challenges to capital supplementation. The deployment of this "new ten regulations" is conducive to alleviating the current pressure for capital supplementation of insurance companies and addressing external market challenges. This article is reprinted from China Securities Co., Ltd. Securities Research, edited by GMTEight: Chen Xiaoyi.