By Reporter Leng Cuihua
Insurance capital, particularly life insurance funds, naturally possesses long-duration, stable-source, and low-volatility characteristics, making them highly suitable for long-term asset allocation to pursue steady returns that withstand market cycles. Over the past two years, guided by relevant policies, the scale of insurance capital entering the stock market has continued to expand, with pilot programs for long-term equity investments broadening progressively. Insurance institutions have seen positive shifts in their performance evaluation criteria, portfolio holdings, and investment philosophies, accelerating the transformation of "long-term money invested for the long term" from policy guidance into concrete investment practice.
At the same time, long-term investment by insurance capital still faces bottlenecks. For instance, some institutions still exhibit a mismatch between long-term goals and short-term performance metrics in their internal evaluations. Smaller insurers also face real-world pressures such as capital constraints and increased volatility in profits and net assets under new accounting standards. A key priority for the next phase is to further encourage insurance funds to "dare to invest, willing to invest, and able to invest," fully converting the advantages of long-term capital into long-term investment strengths.
Elevate benefits configuration to the next level
According to the latest data from the National Financial Regulatory Administration, as of the end of the second quarter of 2026, the total balance of China's insurance fund investments surpassed 1 trillion yuan for the first time. As one of the largest and most stable institutional investors in the capital market, insurance funds are a core component of China's patient capital. Increasing their market participation is critical for stabilizing market expectations, optimizing the market ecosystem, and supporting high-quality development of the capital market.
On 2024 9, 26, the "Guidance on Promoting Long-Term Capital into the Market" was officially issued. Subsequent supporting regulations were rolled out in quick succession, refining assessment mechanisms, expanding investment opportunities, and optimizing capital constraints to guide insurance funds toward long-term value investing from multiple angles.
Regarding the assessment mechanism, policy efforts have focused on extending the evaluation cycle. In 2025 1, six departments including the Central Financial Office, the China Securities Regulatory Commission (CSRC), and the Ministry of Finance jointly issued the "Implementation Plan for Promoting Medium- to Long-Term Capital Entry into the Market," which mandates a comprehensive three-year or longer performance assessment for state-owned insurance companies and expands pilot programs for long-term equity investments by insurance funds. Later that year in 7, the Ministry of Finance issued the "Notice on Guiding Long-Term and Stable Investment by Insurance Funds and Strengthening Long-Cycle Assessment of State-Owned Commercial Insurance Companies" (hereinafter referred to as the "Long-Cycle Assessment Notice"), further detailing specific arrangements for long-cycle assessments.
In terms of investment space and capital constraints, policies have been moderately relaxed and optimized. In 2025 4, the National Financial Regulatory Administration issued the "Notice on Adjusting Supervisory Proportions for Equity Assets of Insurance Funds," which adjusts the upper limit of equity asset allocation for insurance companies based on solvency adequacy ratios, reaching up to 50% of total assets at the end of the previous quarter. In 12 of the same year, the "Notice on Adjusting Risk Factors for Relevant Business of Insurance Companies" was released, lowering risk factors for constituent stocks of the CSI 300 Index held for over three years, constituent stocks of the CSI Dividend Low Volatility 100 Index, and common stocks listed on the STAR Market held for over two years.
Continued policy benefits and a steady market recovery have driven a consistent rise in the scale and share of equity investments by insurance capital, gradually realizing the institutional impact of long-term capital entering the market. As of Q2 2026, the balance of stocks and securities investment funds held by life and property-casualty insurers reached approximately 6.39 trillion yuan, accounting for 16.23%—both figures hitting record highs. Compared with Q2 2024, the balance increased by about 2.6 trillion yuan, and the share rose by 3.55 percentage points.
Stock allocation growth has been particularly strong. As of the end of Q2 2026, insurance funds' stock allocation reached 10.41%, the highest level since regulatory disclosure began, with quarter-over-quarter increases for 8 consecutive quarters.
While conventional accounts continue to increase allocations to equity assets, pilot programs for long-term stock investments by insurance funds are exploring more stable long-term holding mechanisms. Since the pilot program launched in 2023, the second and third batches of pilots were subsequently implemented in 2025. Currently, the cumulative approved amount across all three batches has reached 2220 billion yuan, with 11 funds under management by 7 insurance-backed private securities fund managers now operational. From increasing allocations in conventional accounts to expanding the scope of long-term stock investment pilots, insurance equity investments are evolving from "increasing allocation" to "refining long-term investment mechanisms."
Long Ge, Deputy Director of the Center for Innovation and Risk Management at the University of International Business and Economics, told Securities Daily that the sustained and steady long-term investment by insurance funds can optimize the institutional investor structure in A-shares, cultivate and consolidate an ecosystem for value and long-term investing, and support the stable and healthy development of the capital market.
Extending functional capabilities to support industrial upgrading
The expansion of capital inflows from insurance companies reflects a deep transformation in their investment logic, decision-making mechanisms, and portfolio strategies, further reinforcing the "long-term money for long-term investment" philosophy.
For a long time, insurance funds faced a core contradiction: long-term liabilities versus short-term investment performance cycles. Although the capital is "long-term," performance evaluations are often "short-term," causing investment decisions to be overly influenced by market volatility and ranking pressures. With policies like long-cycle assessments now taking effect, this tension is gradually easing.
A senior executive at Everbright Yongming Asset Management Co., Ltd. (hereinafter referred to as "EYAM") told the Securities Daily that, compared with two years ago, the company has made significant changes in its performance evaluation approach and portfolio style. Previously, the industry widely adopted a one-year evaluation and ranking cycle, requiring investment managers to closely monitor short-term net value fluctuations. Following the issuance of the Notice on Long-Term Performance Evaluation, EYAM further refined its internal assessment framework, placing greater emphasis on long-term potential returns in investment decision-making.
As performance metrics shift and market conditions evolve, insurance capital holdings are also being restructured. According to a representative from Everbright Sun Life Asset Management, compared to two years ago, the current market sentiment has improved, with technology sectors led by artificial intelligence showing strong momentum and market liquidity enhancing. Against this backdrop, the company is transitioning its investment style from a dividend-focused approach to a dynamic balanced strategy: on one hand, it is positioning in new productive forces such as semiconductors, AI, and advanced manufacturing to boost portfolio return elasticity; on the other, it is anchoring high-dividend blue-chip stocks to solidify the return foundation.
As investment cycles extend, insurers are broadening their asset allocation horizons. Leading insurance asset management firms are intensifying their equity positioning and channeling more long-term capital into areas such as technological innovation and advanced manufacturing. Zhao Jun, member of the Party Committee and Vice President of China Life Asset Management Co., Ltd. (hereinafter referred to as "China Life AM"), told *Securities Daily* that the company is seizing the opportunity for medium- and long-term funds to enter the market, increasing its market participation, and strategically investing in high-quality targets within strategic emerging industries and advanced manufacturing sectors. Currently, the proportion of direct and indirect investments in the technology sector relative to total investment assets stands at no less than 30%, making the tech sector a core focus of the company's equity allocation.
Meanwhile, China Life Asset Management is selecting high-quality listed companies through its long-term equity investment pilot program. It is exploring an investment model focused on long-term holdings and value creation, while building a dedicated research system centered on new quality productive forces to identify core sectors and premium assets with strong long-term growth potential.
Shifting from performance metrics to portfolio structure, insurers are prioritizing long-term returns and corporate long-term value. The role of insurance capital is expanding beyond providing stable, long-term funding to include value discovery, sustained partnership, and support for industrial upgrading.
Reform must go deeper.
Despite continuous positive developments, insurers still need to streamline a series of processes to transition from "having long-term capital" to "effectively making long-term investments."
On one hand, the industry's internal assessment transformation is not yet fully in place, and the issue of "long-form, short substance" remains unresolved. Respondents noted that since long-term assessments have been implemented for a relatively short period, some hidden barriers persist. For example, in certain institutions, performance requirements for business units are not fully aligned with regulatory guidance. Factors such as short-term relative return rankings still influence long-term investment decisions to some extent. This means that implementing long-term assessments requires not only extending the assessment timeframe but also coordinating adjustments to performance benchmarks, evaluation methods, and internal incentive mechanisms.
On the other hand, smaller and mid-sized insurers face more immediate constraints. Capital adequacy is a hard requirement. The regulatory cap on equity asset ratios is tied to an insurer's solvency adequacy tier, and equity assets consume significant risk capital. For smaller and mid-sized insurers with limited capital resources, increasing equity investments requires balancing returns against capital consumption.
At the same time, the implementation of new accounting standards has increased volatility pressure on insurers' profits and net assets. Equity assets classified as FVTPL (fair value through profit or loss) reflect market value fluctuations directly in current earnings; those classified as FVOCI (fair value through other comprehensive income) include dividend income in current earnings, while fair value changes affect net assets. Additionally, insurers have become more sensitive to interest rate movements on both their asset and liability sides. These combined factors have made some smaller and mid-sized insurers more cautious when increasing long-term equity allocations.
Addressing existing bottlenecks in "long-term capital for long-term investment" is a key focus of the next phase of deepening reforms.
A senior official at China Life Asset Management believes that to fully unleash the vitality of patient capital and further encourage insurers to "dare to invest, willing to invest, and able to invest," mechanisms must be improved in three areas: First, optimize the ecosystem for long-term capital investment by enhancing tax policies, reducing transaction costs for long-term equity investments, and streamlining processes to ensure value creators receive fair returns.
Second, refine the assessment and error-tolerance mechanism by increasing the weight of long-term performance indicators. Scientifically establish performance benchmarks, evaluation metrics, and calculation methods to enhance the consistency and stability of value-investing behaviors.
Third, streamline capital circulation channels by connecting the full investment chain—from fundraising to exit—enriching product and tool offerings suitable for medium- to long-term investments, and improving the efficiency of long-term capital recycling.
Policy support for small and mid-sized insurers still needs to be more targeted and tailored.
To address the bottlenecks faced by small and mid-sized insurers in implementing "long-term capital for long-term investment," a senior executive at Everbright Sunlife Asset Management proposed three recommendations: First, introduce an industry counter-cyclical adjustment factor to mitigate the impact of market volatility on net assets through flexible measures such as adjusting reserve premiums; second, exclude discount rate effects from performance assessments of state-owned insurers to reduce the influence of uncontrollable factors.
Second, further optimize solvency rules by moderately raising the cap on core tier-2 capital and reducing risk factors for equity assets to alleviate capital pressure on smaller and medium-sized insurers.
Third, enhance the supply of risk hedging tools by allowing qualified small and medium-sized insurers to participate in treasury bond futures trading for risk management purposes. This will diversify asset-side hedging strategies and reduce portfolio volatility risks.
Moving from "leveraging long-term capital" to "cultivating long-term value" is the core pathway for the insurance industry in serving the capital market and the real economy. As supporting mechanisms such as performance evaluation, capital requirements, and risk control continue to improve, the long-term stable value of insurance funds will be further realized, playing a greater role in enhancing the intrinsic stability of the capital market, supporting technological innovation and industrial upgrading, and fostering a virtuous cycle between the real economy and the capital market.
