Participating products are likely to account for a larger share of Chinese life insurers’ new business over the medium term, Fitch Ratings has said.
This shift is driven mainly by persistently low investment yields and regulatory measures aimed at lowering guaranteed rates.
Participating products allow insurers to reduce fixed liability costs and manage long-term return assumptions more flexibly, while remaining competitive in the savings segment. This shift also supports more disciplined product pricing and reduces reliance on high guaranteed returns that may prove difficult to sustain.
Fitch said it views this shift as credit positive because it lower guaranteed liability costs and reduces negative spread risk, although it may moderate new business margins.
