Zhongtai Securities: Asset management in the insurance sector has shown results, and August is expected to continue the relative and absolute profit contribution of July

The Zhitong Finance App learned that Zhongtai Securities released a research report saying that in the current low interest rate environment, insurers are facing the challenge of long-term gaps and revenue gaps. On the one hand, personal insurance companies' regulatory indicators guide the effective term gap to within ± 5 years, forcing insurers to extend the term of fixed income assets and increase the allocation of interest rate bonds. However, on the other hand, in an environment where interest rates continue to be low, insurers' debt costs are relatively rigid, and concerns about preventing potential interest spreads and losses cannot be ignored. What can be seen objectively is that after a series of regulatory policies have been implemented in depth, the industry's overall correction gap has been effectively narrowed, the ability to match assets and liabilities has been enhanced, and the sector's valuation base is expected to be strongly supported. The financial rebalance is expected to continue, and the August sector is expected to continue its relative and absolute earnings contributions in July.

The main views of Zhongtai Securities are as follows:

Long-term gap management is the core of asset liability management of life insurance companies in the current low interest rate environment

If the long-term gap is negative, it means that the debt period is longer than the asset term. When the interest rate curve moves in parallel, the change in asset value will be less than the magnitude of the change in debt value, and there are interest rate risks and reinvestment risks. Based on data availability and comparability, this paper selects the revised long-term gap after scale adjustment as the analytical caliber. The draft for comments on the new asset liability regulations requires optimizing the index calculation caliber, adjusting the pressure scenario according to macroeconomic changes, and incorporating the risk hedging effect of financial derivatives into the long-term calculation. This report has sorted out the long-term gap data disclosed in the current bond rating reports of large life insurance companies in the industry. Before 2024, the expansion of the long-term gap mainly stemmed from both sides of the capital and debt; there are signs that the long-term gap for sample companies has narrowed since 2025

The bank estimates that the current average long-term gap in the insurance industry is about -9 years. Since 2025, the long-term gap in the personal insurance industry has shown a narrowing trend

The life insurance industry presents the “Matthew effect”. This paper divides the analysis of long-term gap data into large life insurance companies and small and medium-sized life insurance companies to more accurately reflect the balance and liability characteristics and long-term management differences of companies of different sizes. According to the comprehensive statistical analysis of the Insurance Asset Management Association and the “Insurance Yearbook”, from 2020 to 2022, the long-term balance and liability gaps of life insurance companies in China were -6.67, -6.57, and -6.28, respectively. Since 2025, the long-term gap has been narrowing.

The long-term gap for small and medium-sized life insurance companies is relatively large. Most of them are expanding year by year from 2022 to 2024, and the trend is narrowing from 2024 to 2025

Based on sample calculations, the bank calculated that the weighted average long-term gap values of small to medium life insurance companies in the sample from 2022 to 2025 were: -9.26, -9.82, -11.10, and -8.74, respectively. The narrowing of the long-term gap in 2024-2025 is mainly due to collaborative adjustments between assets and liabilities. On the asset side, the long-term asset cash flow inflow of the sample company increased by 0.26 to 7.82 years compared to the previous year, mainly due to the fact that various institutions generally increased long-term interest rate bonds and reduced exposure to credit assets, complemented by a moderate increase in equity assets to improve long-term return elasticity, and take more measures to prolong the longevity of assets. The debt-side adjustment was more significant, and the debt cash outflow period was shorter than the previous year by 3.56 to 16.21 years, making it a winner in driving the narrowing gap. By promoting the transformation of floating income businesses to reduce the rigid cost of debt, while adjusting the product term structure to reduce the longevity of debt, and dynamically regulating the pricing of new businesses to control costs, the long-term structure of debt is optimized in multiple dimensions. Overall, the lengthening of the asset side and the shortening of the long-term term of the debt side are jointly driving the narrowing of the long-term gap. Among them, the long-term management results on the debt side are more prominent.

The long-term gap for leading insurers is generally controlled at around -3 years

China Life Insurance's long-term gap was low in 2025. It was only -1.5 years. The long-term gap for China Life Insurance, Taibao, Ping An, and People's Insurance Life Insurance narrowed in 2025. Overall, due to the continuous allocation of long-term bonds, the balance and liability matching of leading insurers was relatively steady, and the long-term gap continued to narrow. Taibao's “dumbbell allocation strategy” is a typical example of this trend — using long-term interest rate bonds as ballast stones on one end to prolong the longevity of assets, and equity assets on the other end to increase long-term income flexibility and reduce exposure to credit assets in the middle. However, it also faces the dual challenges of reinvestment pressure and equity market fluctuations in a low interest rate environment.

Risk warning: risk of interest rate assumptions deviating from expectations; risk of falling short of expectations in the use of derivatives; risk of debt-side restructuring; risk of data disclosure and differences in caliber; risk of untimely research report updates