Open Source Securities: The proportion of dividend-type products is increasing, and insurance companies are expected to continue their strong start momentum.

Open-source securities released a research report stating that the transformation of individual insurance channels is effective, and the demand for dividend insurance in the medium to long term is promising. The Chinese New Year of 2025 is expected to continue the high-quality growth momentum. Market concerns include the potential impact on the Chinese New Year sales growth due to the expected interest rate cuts and the suspension of over-limit withdrawals. However, the sales growth of new products during the Chinese New Year is expected to exceed market expectations, and the value rate remains high. It is expected that the New Business Value (NBV) of top insurance companies in the first quarter is expected to maintain good growth, mainly due to active preparations by insurance companies for the Chinese New Year, and the continued effectiveness of the transformation of individual insurance channels. On the demand side, the rigid demand for savings and retirement, dividend-type products have a competitive advantage. In the medium to long term, dividend insurance products highlight the investment abilities and operational stability of top insurance companies. The industry concentration is expected to increase, and the risk of interest spread loss is expected to improve. The valuation center of the insurance industry is expected to increase. Stable growth efforts are beneficial to the improvement of the asset side, and the dual-wheel linkage trend of insurance asset-liability is expected to continue to be optimistic about the market performance in 2025. Supply side: Product strategy shifts towards dividend insurance, the effectiveness of the transformation of individual insurance channels boosts Chinese New Year sales. The pace of the Chinese New Year in 2025 has been slightly advanced. The contribution of new products in the first quarter remains high, with China Life Insurance, New China Life Insurance, Ping An Insurance, and China Pacific Insurance accounting for 55.8%, 47.8%, 39.5%, and 38.9% respectively. During October, the proportion of dividend-type products in new products released by insurance companies reached nearly half. It is expected that the scale of Chinese New Year product strategies will mainly focus on savings insurance. There is a shift from previous whole life insurance, short-term annuities, and universal insurance towards dividend insurance. Ping An Insurance and Taiping Life have introduced 2.0%+ dividend-type whole life policies, China Life Insurance and New China Life Insurance are focusing on 20-year and 8-year dividend-type annuities respectively, and China Pacific Insurance is expected to continue with whole life and dividend insurance. The number of agents is stabilizing and improving, with the quality of agents gradually improving, providing strong support for the sales of relatively complex dividend insurance products. Demand side: The impact of suspending product sales on the Chinese New Year may be limited, dividend insurance has an advantage in yield. It is expected that the release of suspended sales demands and product switches may have some impact on the Chinese New Year, but will not change the long-term demand for residents' pension savings. The calculated yield of a product achieving a 4.0% interest rate and a 50% dividend rate is 2.7%, which still offers advantages compared to current bank financial products and three-year fixed term deposits from major banks. Considering the backdrop of declining long-term interest rates, dividend insurance with a "locked minimum 2.0% + floating" long-term yield advantage is gradually becoming apparent. The consumer confidence index for life insurance (Q+1) is strongly correlated with the new business growth of listed insurance companies. The improvement in confidence index indicates the ongoing strong demand for life insurance products. In Q3 2024, the consumer confidence index for life insurance was 74.2, increasing by 2.7 compared to the previous quarter and 7.1 compared to the same period last year, reaching the highest level since the first quarter of 2021. Confidence in various types of life insurance, including linked insurance, annuities, and dividend insurance, has significantly increased. With the recovery of consumer confidence in life insurance, the medium to long-term demand for pension savings is promising. Stock recommendations: Benefiting stocks include New China Life Insurance (601336.SH), recommended stocks include China Life Insurance (601628.SH), China Pacific Insurance (601601.SH), and Ping An Insurance (601318.SH). Risk factors: Lower-than-expected sales during the Chinese New Year; downward trend in long-term interest rates; volatility in the capital market.