Zhongtai: The simulated total investment return of insurance funds has increased to 4.79%, and the big logic framework of the sector has remained unchanged.

Zhongtai released a research report stating that the financial conditions are expected to rebalance, and the mid-year report is expected to catalyze the enthusiasm for sector investment in July. Since late June, the overall sector has shown a trend of "three in, two out" lifting the bottom center, and the bank continues to be optimistic about the mid-year market of the sector. The pace of the insurance sector this year has been clearly out of sync with the market. Against the background of the obvious dominance of the technology growth style, the undervalued insurance sector has not been favored by funds. The bank believes that in the short term, the pressure on funds will alleviate, in the medium term, the "deposit migration & slow bull continues" will boost value and profit growth, and in the long term, the realization of the cyclical peak will bid farewell to concerns about interest spread losses. Deposit migration on the liability side and continued slow bull on the asset side are the long-term logic foundation of the insurance sector. Zhongtai's main points are as follows: Through the Zhongtai Non-Bank Insurance Fund Utilization Yield Index system, the investment yield of the industry for the next three years is simulated and anticipated. Specifically, the bank first estimates the "new money income rate" (NMII) level based on the current asset allocation structure of insurance funds, combined with the current yield of various assets (including bond maturity yield, stock dividend yield, average yield of long-term equity investment, expected yield of trust, etc.); secondly, the bank calculates the industry average net investment income rate (NII) based on the average investment duration and net cash flow scale of insurance funds (net premium inflow and outstanding policy benefit difference), assuming a 6-year average of the yield of the various asset classes aforementioned; finally, the bank combines the trading financial assets buy-sell spread (non-annualized) to obtain the total investment yield rate (TII). In summary, the bank estimates that the current annualized new money income rate is about 2.61%; the industry's average net investment income rate is estimated to be 3.35%, 3.09%, and 2.87% for 2025-2027. The current period TII of insurance funds from the beginning of the year i...