Source: Economic Reference Daily
Recent market volatility has increased, drawing attention to shifts in equity allocations by insurance funds. Industry insiders told reporters that while some insurers have rebalanced their portfolios temporarily, the overall scale of reductions remains limited. Proprietary insurance funds cannot reduce net positions due to allocation requirements, while outsourced accounts face constraints from client redemptions and drawdown limits. The core principle of "long-term capital for long-term investment" remains unchanged.
Meanwhile, institutional investors are increasing their equity allocations. Data from the National Financial Regulatory Administration shows that as of the end of Q2 this year, total assets under management by insurance companies surpassed 40 trillion yuan for the first time. Combined holdings in stocks and securities investment funds reached 6.39 trillion yuan, accounting for 16.23% of total assets—a record high in both absolute size and proportion. Stock allocations specifically rose to 10.41%, marking the fourth consecutive quarter of sequential growth. While public shareholding activity has slowed noticeably, insurers are channeling patient long-term capital into technology and new quality productive forces through IPO strategic placements and private equity funds. Looking ahead to Q4, multiple insurers express cautious optimism, focusing on a dual strategy of "high dividends + tech growth" while prioritizing earnings certainty and valuation safety margins.
Long-term investment fundamentals remain unchanged.
One of the key concerns for the market is whether insurance funds are reducing their holdings en masse amid volatility. A non-bank securities analyst told reporters that some insurers reduced positions since 10, but the scale was limited. Due to regulatory minimum holding requirements for proprietary insurance capital, large accounts can only rebalance—not net reduce. Another category, outsourced special accounts, must act in clients' best interests and face redemption and drawdown constraints; their passive de-risking logic resembles that of public mutual funds. "However, recent market volatility is not being driven by insurance funds," the analyst said.
A senior executive from a leading insurance asset management firm stated that insurance capital is firmly committed to serving as the "ballast" and "stabilizer" of the capital market, and especially as a "partner in the race" and "accelerator" for new quality productive forces. The company is continuing to increase its allocation to key areas such as new quality productive forces and advanced manufacturing. Another industry insider noted that approaches to managing equity asset risks vary among insurers; while some have set clear risk control thresholds, most insurance capital focused on dividends has not undertaken significant operational adjustments.
Long Ge, Deputy Director of the Center for Innovation and Risk Management at the University of International Business and Economics, told reporters that, in accordance with regulations, the equity cap for insurers is tiered based on solvency ratios, ranging from 10% to 50%. In practice, industry stock and fund positions typically fall between 10% and 20%, with long-term capital favoring dividend-paying stocks and equity assets classified under other comprehensive income. Life insurers rebalance their own funds according to principles of safety, liquidity, return, and asset-liability matching—not by chasing price spikes or panic selling like retail investors.
Under the IFRS 9 framework for new financial instruments, equity assets held by insurers in listed companies generally fall into three categories: (1) equity assets whose fair value fluctuations are recognized in profit or loss; technology and growth stocks are typically classified under this category.
Second, equity assets whose market value fluctuations are recorded in other comprehensive income and do not affect current-period profit; this category primarily holds the core position for high-dividend yield portfolios.
Third, long-term equity investments are accounted for using the equity method to recognize investment income. Longgang's analysis indicates that disposing of Category I targets converts floating losses into actual losses, directly impacting current net profit; reducing holdings in Category II targets only realizes accumulated floating losses within net assets, with no effect on the income statement; and gains or losses from disposing of long-term equity investments are recognized in current earnings. Life insurance long-term funds are predominantly allocated to Category II and long-term equity investment accounts. The primary drivers of profit impact are absolute return special accounts, fixed-income-plus products, and trading accounts—not the core policyholder funds. Promote.
Bullish on market recovery
Data released by the China Insurance Association shows that insurance capital's "block-level" activity has slowed significantly this year. Including cases from last year-end and announcements made this year, the total stands at approximately 9, down from 30 during the same period last year.
Industry analysts note that 2025 was a peak year for insurers concentrating on buying high-dividend stocks, resulting in a high base. This year, the valuations of quality high-dividend assets have risen and their cost-effectiveness has declined, while market performance for dividend-focused assets remains weak. Additionally, making tender offers consumes solvency capital and triggers regulatory constraints on investment concentration and disclosure thresholds at tender offer levels, prompting insurers to exercise greater caution. Slowing premium growth at some companies has also limited their capacity for large-scale tenders. Another insurer's investment head noted that once an insurer makes a tender offer, it attracts significant market attention; stock price volatility can create pressure on investors. Therefore, companies are particularly careful when approaching tender offer thresholds such as 5% or 10%.
However, a decline in the number of equity stakes does not signal a cooling in equity investment. Beyond record-high allocation sizes, listed insurers have also increased their positions. China Life's stock and fund allocation rose from 16.89% at the end of 2025 to 19.14% in the first half of 2026; New China Life's combined stock and fund holdings increased from 21.2% at the end of 2025 to 25.6%, with its stock portion rising from 11.8% to 13.2%; Ping An maintained its stock position above 14.5%, while total holdings in stocks and equity funds reached RMB 1.28 trillion, accounting for 19.4% of invested assets—a 0.2-percentage-point increase from year-end last year. In the first half of this year, the five A-share listed insurers collectively reported net profit attributable to parent companies totaling RMB 3173.87 billion, up 78.12% year over year.
Insurance capital equity investment strategies are shifting. According to Zhou Jin, a financial services consulting partner at Tianzhi International, this year's focus for insurance funds' equity investments is moving away from major public market blockholdings toward semi-primary markets and IPO locked-price placements. The role of these funds is evolving from purely financial investors to strategic partners deeply integrated with enterprises, while asset allocation is gradually shifting from high-dividend sectors like banking and infrastructure to hard technology and new quality productive forces.
This year, insurance capital has participated in strategic allocations of initial public offerings to invest in technology innovation companies such as CXMT, Unitree Robotics, and Cambricon. In the primary market, New China Life Insurance, in collaboration with CITIC Goldstone and other institutions, established a Jinshi Technology Innovation Industry Investment Fund in Hubei with a total scale of 20 billion yuan. China Life Insurance plans to contribute up to 45 billion yuan to set up the Qingdao Chengxin Zhida Equity Investment Center, with a total scale not exceeding 60 billion yuan, focusing on equity investments in high-quality unlisted companies in artificial intelligence and semiconductors.
Looking ahead to Q4, multiple insurance asset management firms remain optimistic about market performance, anticipating reduced volatility and a rebound window. The market is expected to primarily see structural recovery, with a focus on value and defensive sectors, while investors in tech growth should prioritize companies with high earnings certainty. A senior executive at a large insurer stated that, from a mid-term perspective, the A-share market remains in a profit recovery phase; the Q3 correction created an favorable entry point. The firm will maintain a neutral-to-positive equity allocation and adhere to its "high dividend + tech growth" strategy. Huatai Asset Management believes that current market weakness stems mainly from domestic factors such as weak domestic demand and liquidity outflows. Short-term trading is likely to remain range-bound with bottoming-out dynamics, with potential turning points dependent on marginal policy shifts domestically in Q4. In terms of allocation, the firm will adopt a cautiously optimistic stance, controlling position sizes and drawdowns, while positioning around sectors supported by Q3 earnings verification and strong profitability outlooks.
Research data also confirms insurers' growing interest in the tech sector. In Q2026, more than 150 insurance institutions conducted research, covering over 700 listed companies. Tech firms accounted for more than half of these targets, with pension insurers showing particularly high engagement. Industry experts expect insurance funds to continue increasing their positions in dividend-paying assets to mitigate market volatility risks. Moving forward, some tech holdings may be classified under "other comprehensive income" to reduce their impact on the income statement. As long-term, patient capital, insurers are evolving from being a "ballast stone" to a "boosting force" in the equity market. Their ability to rebalance during market fluctuations and increase positions amid structural shifts remains a key trend to watch in the fourth quarter.
