China Securities Co., Ltd.: Shared resonance of capital and liabilities improvement continues to focus on the transformation of the product structure of insurance companies to improve the quality of liabilities.

China Securities Co., Ltd. securities research report stated that the successive reduction of the upper limit of the fixed interest rate for traditional and dividend insurance products on August 1 and September 1 respectively has driven residents' demand for savings insurance to be concentrated and released. The growth rate of new life insurance policies in the third quarter has significantly improved compared to the first half of the year, and the value rate has also increased under the combined effects of optimizing interest rate differentials with the reduction of fixed interest rates and optimizing fee differentials with the "one report, one line" policy. Looking ahead, the reduction of fixed interest rates on the liability side and the implementation of the "one report, one line" policy in the agent channel will help NBVM continue to improve, and equity assets are expected to contribute to performance elasticity under the background of low base figures from the same period last year. The issuance of ultra-long-term national bonds is also expected to stabilize long-term interest rates in the short term, easing pressure on insurers' portfolios. Key points from China Securities Co., Ltd: The reduction in fixed interest rates has driven the concentrated release of savings insurance demand, the growth rate of new policies in the third quarter has significantly improved over the first half of the year, and the liability side of life insurance has seen increased quantity and quality. Savings insurance products are one of the few financial products that offer guaranteed returns in the post-asset management regulation era. The continuous competitiveness of the products is evident, and the reduction of fixed interest rate caps for traditional and dividend insurance products on August 1 and September 1 respectively has further driven residents' demand for savings insurance. New policies for China Life/Ping An/Taikang/New China/ PICC in the third quarter increased by +46%/+50%/+15%/+163%/+87% compared to the same period last year, showing a significant improvement in new policy growth compared to the first half of the year. The NBVM has also improved under the combined effects of optimizing interest rate differentials with the reduction in fixed interest rates and optimizing fee differentials with the "one report, one line" policy. Under the new accounting standards, more equity assets are measured under the FVTPL model, increasing the impact of market fluctuations on the income statement. Under the combined effect of low base figures from the same period last year and the rebound in the stock market since September 24, total investment income has significantly increased, driving high profits. Looking ahead, on the liability side, the reduction in fixed interest rates and the implementation of the "one report, one line" policy in the agent channel will help NBVM continue to improve. Given the limited acceptance of market volatility by residents, the company believes that savings insurance still has strong competitiveness. Although there may be fluctuations in demand in the short term due to the concentrated release of demand, long-term prospects for new policies still look promising. On the asset side, under the background of low base figures from the same period last year, equity assets are expected to contribute to performance elasticity, and the issuance of ultra-long-term national bonds is expected to stabilize long-term interest rates in the short term, easing pressure on insurers' portfolios. The Shanghai and Shenzhen 300 Index had a cumulative return of -7.00% in the fourth quarter of last year and a cumulative return of +1.69% as of the close on November 12 this year. Property insurance: Premium income is rebounding, and the impact of multiple large disasters compared to the same period last year on the COR, viewing the high growth opportunities next year on a low base. In terms of premium income, in the third quarter of 24Q3, the rebound in premium income has already appeared under the influence of the policy of replacing old cars with new cars and the recovery of non-motor insurance underwriting pace; optimistic about further increases in industry premium growth under the stimulus of policies in the future; in terms of COR, the pressure on COR is obvious in the first three quarters due to the multiple incidents of large disasters compared to the same period last year, but with the strengthening of industry regulation and the improvement of competitive landscape, the expense ratio has already decreased significantly; optimistic about the improvement in industry profitability next year and the high growth opportunities on a low base. Risk reminders: Unexpected downward movement of long-term interest rates: If long-term interest rates unexpectedly decline, it will have an adverse effect on the company's investment income. Significant drop in the equity market: If there is a significant drop in the equity market, it will have an adverse effect on the company's investment income. Continued significantly lower than expected recovery of demand for protection-type products among residents: Protection-type products generally have a higher new business value rate. If the demand for such products among residents remains significantly lower than expected, it may have a negative impact on the company's growth in new business value. Market competition intensifies beyond expectations: The expansion of the range of self-determined pricing coefficients for car insurance allows insurance companies to have greater ability to adjust downward the discount coefficients for car insurance; although overall, we believe that there is little room for further decline in average car insurance premiums, and only a few policies are close to the lower limit of pricing coefficients, thus the industry's overall possibility of price reduction is small; however, some small and medium-sized insurance companies may still try to attract customers through lower prices, intensifying competition in the car insurance industry. If market competition intensifies beyond expectations, the company may face situations such as a decrease in premium income and a reduction in market share. Unexpected impact of natural disaster risks: In the event of a major natural disaster, the company's insurance payout ratio will significantly increase, leading to an increase in the company's comprehensive cost ratio, negatively affecting the company's performance.