Zhongtai Securities: Predetermined interest rate research values have rebounded for two consecutive quarters, making it difficult for the insurance industry to “speculate and stop sales” in the medium term

The Zhitong Finance App learned that Zhongtai Securities released a research report saying that the research value of scheduled interest rates has rebounded for two consecutive quarters, making it difficult to “speculate and stop sales” in the medium term. Since late June, the sector as a whole showed an upward trend at the bottom center. The rebalance in terms of capital is expected to continue, and the preliminary increase in the mid-term report catalyzes enthusiasm for investment in the sector in July. Since this year, the pace of the insurance sector has clearly been misaligned with the market. Against the backdrop of a clear advantage in technological growth style, the undervalued insurance sector has failed to be favored by capital. The bank believes that the sector's broad logical framework of “looking at financial pressure relief in the short term, boosting value and profit growth in the medium term, “moving deposits & slow bulls” boosting value and profit growth, and looking ahead in the long run, to clear out hidden concerns about interest spreads and losses has not changed. The relocation of debt-side deposits and continued slow growth on the asset side are the long-term logical foundations of the insurance sector.

The main views of Zhongtai Securities are as follows:

Incident: On July 21, the China Insurance Industry Association organized the 2Q26 regular meeting of the Personal Insurance Industry Interest Rate Research Expert Advisory Committee

According to the conference, the current research value of the scheduled interest rate for ordinary personal insurance products is 1.94% (the previous value was 1.93%. For the first time since the data was disclosed, there was a cumulative increase of 5 bps for two consecutive quarters, and the bank's calculation results were 1.91%).

The upward trend of 2H25 long-term interest rate fluctuations is gradually established. Although there is a pullback in 1H26, the probability of breaking the previous low is not high, which indicates that the external environment has bottomed out and picked up

At the beginning of 2025, the Financial Supervisory Authority issued the “Notice on Matters Relating to Establishing a Mechanism for Linking Predetermined Interest Rates to Market Interest Rates and Dynamic Adjustment Mechanisms” (hereinafter referred to as the “Notice”), which proposes to establish a mechanism for linking fixed interest rates to market interest rates and making dynamic adjustments to guide companies to strengthen asset liability linkage and price scientifically and prudently. The “Notice” clearly states “Refer to long-term interest rates such as 5-year LPR, 5-year term deposit benchmark interest rate, and 10-year treasury bond yield to determine the target interest rate benchmark value, which will be issued quarterly by the Insurance Industry Association.” As of the end of 2Q26, the 5-year LPR was 3.5% (same as 1Q26), the 5-year term deposit benchmark interest rate was 1.3% (same as 1Q26), and the 10-year treasury bond yield to maturity was 1.73% (slightly down 8.4 bps from 4Q25). However, according to the calculation formula, the basic return level of the research value involves the 250-day moving average and the 750-day moving average. The trend recovery in 2H25 long-term interest rates has led to a continued recovery in research values. Since 4Q24 first disclosed the planned interest rate research values, the changes in the last 6 research values were -21bps, -14bps, -9bps, -1bps, +4bps, and +1bps, respectively. The decline gradually narrowed and showed a recovery for 2 consecutive quarters for the first time.

The 2Q26 Association Personal Insurance Interest Rate Research Expert Advisory Committee continued its positive affirmation, highlighting macroeconomic resilience

The topic of exchange at this regular meeting was capital market observation and application of artificial intelligence (1Q26 is about global investment strategies in a geopolitical context). In the field of opinions of insurance industry experts, statements related to “vigorously promote high-quality development of pension finance and commercial health insurance” and “continuously strengthen asset liability management” were removed, and “five major articles focusing on the main business and doing a solid job in finance” were added. This session continued the positive statement of 1Q26, emphasized the resilience of macroeconomic development, and removed the description that 1Q26 “still faces problems and challenges such as strong supply and demand, and external shocks” in the macro environment. It is proposed that “the index of business activity in the monetary and financial services, insurance and other industries is in a high boom range, new momentum is growing rapidly, and people's livelihood security is strong and effective.”

If the market interest rate remains unchanged, the simulated estimated value of the research value of the 2026 scheduled interest rate calculated by the bank at the end of 2026 is 1.86%. Focus on the difference between the dividend insurance reservation interest rate and the demonstration interest rate

The research value of the 1Q26 scheduled interest rate was 1.94%. The gap from the highest predetermined interest rate value (2.0%) of ordinary life insurance products currently on sale was only 6 bps, which could not trigger the “2 consecutive quarters high” threshold condition agreed by the previous regulatory agreement. According to the bank's estimates, if the subsequent treasury bond yield curve, 5-year term deposit interest rate, and 5-year LPR maintain the current level, the simulated estimated value of the study value of the scheduled interest rate at the end of 2026 is 1.86%. In the medium term, it is unlikely that the upper limit of the scheduled interest rate for new products will be adjusted. However, it is not ruled out that supervision will comprehensively consider subsequent stock and bond market fluctuations and insurance capital's own operating conditions. Previously, some insurers launched dividend products with a predetermined interest rate of 1.25%, pointing to differentiated management ideas for each insurer in the high-quality development stage; before June 30, the maximum interest rate limit for dividend insurance was lowered from 3.9% to 3.5%. The bank expects that in the future, it will not be ruled out that various insurers will demonstrate interest rate levels in the dividend insurance pricing segment by matching different levels of predetermined interest rates to better achieve a “low insurance+high fluctuation” income mix.

Risk warning: The decline in predetermined interest rates reduces product attractiveness and makes sales more difficult, there are deviations between research estimates and reality, and the risk of untimely information updates, etc.