Cathay Securities: In the first half of 2025, the growth of life insurance premiums is steady, and the reduction of the guaranteed interest rate is beneficial for improving liability costs

According to the Zhitong Finance APP, Guotai Junan released a research report stating that the original premium income of life insurance in June was 414.1 billion yuan, a year-on-year increase of 21.0% (previous value was 24.1%). It is expected that customer demand for insurance savings will remain strong against the backdrop of bank interest rate cuts. The strong customer savings demand in the first half of 2025 has driven the growth of life insurance premium prosperity, while the growth of property insurance premiums remains stable. It is worth mentioning that on July 25, the Insurance Association announced that the latest research value of the guaranteed interest rate for ordinary life insurance products is 1.99%, which has been below the highest guaranteed interest rate of 2.5% for products on sale for two consecutive quarters, triggering the adjustment mechanism. It is expected that the guaranteed interest rate will be adjusted in a timely manner with market interest rates, further reducing the cost of new business liabilities and improving the risk of interest spread losses.

Guotai Junan's main viewpoints are as follows:

The growth rate of life insurance premiums will continue to improve in June 2025, while health insurance and accident insurance still face pressure.

From January to June 2025, the cumulative premium income of the insurance industry was 373.5 billion yuan, a year-on-year increase of 5.3%. The cumulative original premium income of the life insurance industry from January to June was 277.05 billion yuan, a year-on-year increase of 5.4%, with life insurance, health insurance, and accident insurance at 228.76 billion yuan, 46.14 billion yuan, and 2.16 billion yuan, respectively, year-on-year increases of 6.6%, 0.1%, and a decrease of 6.1%. The original premium income of life insurance in June was 414.1 billion yuan, a year-on-year increase of 21.0% (previous value was 24.1%), and it is expected that customer demand for insurance savings will remain strong against the backdrop of bank interest rate cuts; health insurance for the month was 73.5 billion yuan, a year-on-year decrease of 3.6% (previous value -6.3%); accident insurance for the month was 3.3 billion yuan, a year-on-year decrease of 9.4% (previous value -8.5%), indicating that customer demand for health protection products remains weak.

From January to June, the new investment contributions from policyholders (mainly universal insurance) were 381.1 billion yuan, a year-on-year decrease of 3.0%, with 40.5 billion yuan in June, a year-on-year increase of 9.3% (previous value 1.2%), indicating that customer demand for concentrated purchases of products based on expectations of guaranteed interest rate adjustments for universal insurance has increased. From January to June, the new contributions to independent accounts of investment-linked insurance were 8.2 billion yuan, a year-on-year decrease of 19.8%, with 1.9 billion yuan in June, a year-on-year decrease of 23.9% (previous value -48.8%), indicating that customer willingness to purchase high-risk preference products remains weak.

The growth of auto insurance premiums rebounded month-on-month in June 2025, with differentiated performance in non-auto insurance.

From January to June 2025, the cumulative original premium income of property insurance was 964.5 billion yuan, a year-on-year increase of 5.1%, of which the original premium income of auto insurance and non-auto insurance was 450.5 billion yuan and 514.0 billion yuan, respectively, year-on-year increases of 4.5% and 5.6%. The original premium income of property insurance in June was 183.9 billion yuan, a year-on-year increase of 4.6% (previous value 5.4%), of which the original premium income of auto insurance was 78.5 billion yuan, a year-on-year increase of 5.0% (previous value 4.7%). The sales of passenger vehicles in June were prosperous (year-on-year increase of 18.2%, previous value 13.7%), indicating that the growth of insured vehicles is a major driver of auto insurance premiums; the original premium income of non-auto insurance was 105.5 billion yuan, a year-on-year increase of 4.4% (previous value 6.3%).

In June, the growth rates of agricultural insurance, health insurance, accident insurance, and liability insurance were 5.4% (previous value 6.4%), 5.7% (previous value 21.5%), 11.2% (previous value 12.5%), and 6.1% (previous value -2.2%), respectively. It is expected that the growth of policy-related business will decline due to seasonal underwriting factors, while the year-on-year growth of liability insurance has improved Expected mainly due to insurance companies rushing to meet semi-annual business targets.

The guaranteed interest rate for life insurance will be lowered, which is favorable for alleviating pressure on interest spread losses.

On July 25, the Insurance Association announced that the latest research value for the guaranteed interest rate of ordinary life insurance products is 1.99%. The guaranteed interest rate research value has been below the highest guaranteed interest rate of 2.5% for products on sale for two consecutive quarters, exceeding 25 basis points, triggering the adjustment mechanism. On the same day, China Life/Ping An/CPIC issued product announcements, stating that they will adjust the guaranteed interest rates for new traditional/participating/universal products to 2.0%/1.75%/1.0%, and will stop selling old products by the end of August. It is expected that the guaranteed interest rates will be adjusted in a timely manner with market interest rates, which will further reduce the cost of new business liabilities and improve the risk of interest spread losses.

On the subject side

It is recommended to increase holdings in NCI (601336.SH), China Life (601628.SH), CPIC (601601.SH), and Ping An (601316.SH).

Risk Warning

Long-term interest rates may decline; significant drop in demand for savings insurance; increased catastrophe claims