Zhongtai: The research value of the reserve interest rate has been increasing for two consecutive quarters, and it is difficult for the insurance industry to see a "speculative stop sales" in the mid-term.

Zhongtai released a research report stating that the research value of the forecast interest rate has risen for two consecutive quarters, making it difficult for the mid-term to see a "speculative stop sale". Since late June, the overall sector has shown a trend of bottoming out, with the balance of funds expected to continue. The mid-year report is expected to catalyze the enthusiasm for sector investment in July. This year, the pace of the insurance sector is clearly out of sync with the market. In the background of the obvious dominance of the technology growth style, the undervalued insurance sector has not received favor from funds. The bank believes that the short-term view of fund selling pressure relief, the mid-term view of "deposits moving & slow bull market continues" to boost value and profit growth, and the long-term view of cyclical realization bid farewell to hidden worries remain unchanged. The relocation of deposits on the liability side and the continuous slow bull market on the asset side are the long-term logical basis for the insurance sector. Zhongtai's main points are as follows: Event: On July 21, the China Insurance Industry Association organized the 2Q26 meeting of the Personal Insurance Industry Interest Rate Research Expert Consultation Committee The meeting believed that the current research value of the ordinary personal insurance product's forecast interest rate is 1.94% (compared to 1.93% previously, the first time it has increased for two consecutive quarters since the data was disclosed, the bank's calculation results were 1.91%). The trend of long-term interest rates in 2H25 is gradually established, and although there was a slight pullback in 1H26, the probability of breaking the previous low is not high, pointing to external environment improvement. At the beginning of 2025, the China Banking and Insurance Regulatory Commission issued the "Notice on Establishing Matters Related to Establishing a Mechanism for Linking Forecast Interest Rates with Market Interest Rates and Dynamically Adjusting" (hereinafter referred to as the "Notice"), proposing to establish a mechanism for linking forecast interest rates with market interest rates and dynamically adjusting mechanism to guide companies to strengthen asset-liability linkage, and scientifically and prudently price. The "Notice" clearly states, Refer to the 5-year LPR, 5-year fixed deposit benchmark interest rate, 10-year bond maturity yield and other long-term interest rates to determine the benchmark value of the forecast interest rate, which is published quarterly by the Insurance Industry Association. As of the end of 2Q26, the 5-year LPR was 3.5% (unchanged from 1Q26), the 5-year fixed deposit benchmark interest rate was 1.3% (unchanged from 1Q26) and the 10-year bond maturity yield was 1.73% (a slight decrease of 8.4bps from 4Q25). However, according to the calculation formula, the base return level of the research value involves the 250-day moving average and the 750-day moving average, and the gradual warming trend of long-term interest rates in 2H25 has led to a continuous warming of the research value. Since the first disclosure of the forecast interest rate research value in 4Q24, the change in the research value in the most recent 6 periods has been -21bps, -14bps, -9bps, -1bps, +4bps, and +1bps, with the decline gradually narrowing and the first consecutive warming in two quarters. The 2Q26 meeting of the Association's Personal Insurance Industry Interest Rate Research Expert Consultation Committee continued the positive affirmation statement and highlighted the resilience of the macro economy The special topic for this meeting was capital market observation and application of artificial intelligence (1Q26 was about global investment strategy under the geopolitical background). In the field of insurance expert opinions, the statement on "vigorously promoting the high-quality development of pension finance and commercial health insurance" and "continuously strengthening asset-liability management" was deleted, and "focusing on the core responsibilities and solidly carrying out the five major financial articles" was added. This meeting continued the positive affirmation statement of 1Q26 and emphasized the resilience of macroeconomic development, removing the description of "still facing problems and challenges such as strong supply and weak demand, external shocks" in the macro environment in 1Q26. It was proposed that "the commercial activity index of monetary and financial services, insurance, and other industries is in a relatively high prosperous range, new driving forces are growing rapidly, and the social security is strong and effective." If market interest rates remain unchanged, the simulated value of the forecast interest rate research value at the end of 2026 calculated by the bank is 1.86%, focusing on the differentiation matching of the dividend insurance forecast interest rate and the demonstration interest rate The forecast interest rate research value in 1Q26 was 1.94%, which is only 6bps away from the highest forecast interest rate value for ordinary personal insurance products for sale (2.0%), which cannot trigger the previously regulated "continuously high by 25bps or more for two consecutive quarters" threshold conditions. According to the bank's calculations, if the subsequent government bond yield curve, 5-year fixed deposit rate, and 5-year LPR remain at current levels, the simulated value of the forecast interest rate research value at the end of 2026 would be 1.86%, and the possibility of adjusting the upper limit of the new product's forecast interest rate in the medium term is not high. However, it is not ruled out that regulators will consider comprehensive factors including subsequent stock and bond market fluctuations and the operating conditions of insurance funds. Some insurance companies have launched dividend products with a forecast interest rate of 1.25%, indicating different operation strategies among insurance companies in the high-quality development stage; the upper limit of the dividend insurance demonstration interest rate was lowered from 3.9% to 3.5% by June 30. The bank expects that in the future, insurance companies may match different levels of forecast interest rates to achieve a better combination of "low guaranteed + high floating" returns in the dividend insurance pricing segment. Risk Warning: The decrease in forecast interest rates reduces the attractiveness of products and increases the difficulty of sales, there may be deviations between the research report calculations and actual situations, and risks of outdated information updates.