Founder: Q2 estimated interest rate for reserves may be 1.96%. Marginal improvement for insurance industry assets and liabilities.

Founder released a research report stating that the insurance industry recommendation rating is maintained. Currently, the four insurance companies in the A-share market are all at relatively low historical levels, with little downside risk. On the asset side, stable stock market policies are accelerating, equity markets are warming up, interest rates are stabilizing and rising, and insurance companies' investment side is expected to gradually improve; on the liability side, the sales of savings insurance are picking up, healthcare reform is catalyzing demand for high-end medical insurance, bancassurance integration and anticipated interest rate adjustments are expected to drive NBVM improvement, thereby leading to steady growth in NBV; the decrease in major disaster risks is helping to significantly improve the COR, and the industry's fundamental trends continue to be positive. Key points from Founder: Events Recently, China Insurance Industry Association organized or held a meeting in July of the Expert Consultation Committee on Life Insurance Liability Reserve Assessment Interest Rate for the second quarter of 2025. This report estimates that the Q2 designated interest rate assessment value may be 1.96%, a decrease of -17bp compared to the previous quarter, and the Q3 life insurance designated interest rate may undergo further reductions. By the end of August, the maximum designated interest rate for life insurance may be reduced by 50bp to 2.0%. According to the "Notice on Establishing the Linkage and Dynamic Adjustment Mechanism of Designated Interest Rates with Market Interest Rates" issued by the China Banking and Insurance Regulatory Commission: when the maximum value of the designated interest rate for ordinary life insurance products (current value 2.5%) is 25bp or more higher than the designated research value for two consecutive quarters (2.13% in Q1 25; estimated 1.96% in Q2 25), the maximum value of the designated interest rate for new products should be promptly reduced, and the transition work for old and new products should be smoothly completed within two months. Improvements on both the asset and liability sides of the industry, with overall fundamentals continuing to improve Firstly, on the liability side: with the decrease in the designated interest rate, the industry's new policy fund costs are optimized, and the risk of loss due to interest spread may continue to ease. Meanwhile, the 5-year bank deposit rate has fallen to 1.5%, and dividend insurance has a designated interest rate not lower than the bank deposit rate, with expectations of upward fluctuations in product yields, still remaining attractive compared to similar guaranteed savings products. As Q3 enters a period of phased suspension of trading and sales, the marginal increase in premium growth rate, along with the continuous promotion of integration between the liability side and bancassurance, and the adjustment of product structure (shifting from increasing term life to dividend insurance), will continue to improve the cost on the liability side, leading to a possible further improvement in NBVM which will in turn help boost NBV to maintain double-digit growth.