The decision-maker in the A-share market has changed. What does it mean that the scale of insurance funds has exceeded that of public funds for the first time?
39.44 trillion yuan - this is the balance of insurance funds under management at the end of the first quarter of 2026. During the same period, the net asset value of public funds was 37.53 trillion yuan. This is the second time since the end of 2025 that the balance of insurance funds under management has exceeded the net asset value of public funds.
“This is inevitable. The premium income on the liability side of the insurance industry is still growing at a rate of over 5%,” said Li Hong, the head of the equity investment department of a medium - sized life insurance company.
Some people jokingly say that the A - share market has a new decision - maker. This not only means that insurance funds have become an important force in the capital market in terms of quantity but also implies that they have an influence on market price formation, valuation stability, and long - term investment structure.
The balance of insurance funds' stock investments is approaching the scale of active equity funds of public funds. A research report from Zhongtai Securities shows that the balance of insurance funds' stock investments has reached 3.84 trillion yuan, only 150 billion yuan less than the scale of public funds' active equity funds (ordinary stocks + partial - stock hybrid funds + flexible allocation funds), which is 3.99 trillion yuan.
One ongoing change is that the proportion of insurance funds' equity investments has increased from 13.3% to 15.4% in three years. Despite the market adjustment in the first quarter, insurance funds continued to increase their positions, and the scale of their stock and securities investment funds increased by 201 billion yuan compared with the beginning of the year.
“As interest rates continue to decline and bond coupons continue to narrow, while the company's premium scale is growing at a level of hundreds of billions of yuan, it is not easy to achieve the set return target on the investment side once the high - yield assets from the past mature,” an investment professional from a large insurance company told a reporter from Economic Observer. Equity assets are becoming increasingly important in asset allocation, but how to allocate them to reduce volatility also tests the investment - side strategies.
The Key to Investment Returns
Li Hong deeply agrees with this. Since the beginning of this year, he has been extremely busy. While the number of meetings has increased, so has the number of research trips.
“As the scale of funds under management has grown, the shortage of personnel has become more acute. This year, I finally managed to get a recruitment position, mainly for someone familiar with advanced manufacturing and technology - growth styles,” Li Hong said, thinking about expanding his investment team.
This is not an isolated case. Many insurance companies or insurance asset management companies are recruiting for positions related to stock investment, including equity fund investment managers, stock investment managers, equity investment researchers, data administrators, industry researchers, and investment assistants.
Behind the “recruitment drive” of insurance funds is the continuous increase in the proportion of equity allocation, and there is even a trend of buying more when the market falls.
Affected by external factors, the A - share market adjusted in the first quarter of this year. All three major indices closed lower at the end of the quarter. In particular, the Shanghai Composite Index closed at 3891.86 points, down 1.94% from the beginning of the year. However, the pace of insurance funds' position - increasing was not affected. Data shows that at the end of the first quarter of 2026, the total balance of funds under management of life insurance companies and property insurance companies reached 38.02 trillion yuan, a 2.5% increase from the end of 2025. A research report from Zhongtai Securities shows that the total balance of insurance funds' stock and securities investment funds was 5.9 trillion yuan (3.84 trillion yuan in stocks and 2.07 trillion yuan in funds), an increase of 201 billion yuan compared with the beginning of the year. Among them, 102.4 billion yuan flowed directly into the stock market, and 98.6 billion yuan was allocated to funds.
“Most of it is new funds,” Li Hong said. The premium income of the insurance industry is increasing at a scale of trillions of yuan every year, and the funds have to find a place to go.
Data disclosed by the National Administration of Financial Regulation shows that in the first quarter of 2026, the original insurance premium income of insurance companies was 2.3 trillion yuan, a year - on - year increase of 6.2%. Among them, the original insurance premium income of life insurance companies reached 1.78 trillion yuan.
In the view of Chen Hui, the director of the China Actuarial Science and Technology Laboratory at the Central University of Finance and Economics, the reason for the counter - cyclical growth of the Chinese insurance industry lies in the increase in residents' wealth, the change in residents' asset allocation, and the fact that insurance has become a “high - quality asset”. The continuous increase in the allocation of equity assets by insurance funds is mainly due to the need for asset allocation in the face of high liability costs.
“Currently, the yield of the ten - year treasury bond is stable at around 1.8%, and high - quality alternative assets have also become scarce. In this context, insurance funds have no choice but to increase their allocation to equity investments,” Chen Hui said.
In the latest asset allocation map of insurance funds, bonds are the core position, accounting for half (50.5%); stocks are an asset with a higher proportion than bank deposits, accounting for 10.1%. In 2023, the insurance industry was more willing to allocate 9.46% of its assets to bank deposits and 7.96% to stocks.
The change stems from the continuous decline in interest rates. When the yield of the 30 - year treasury bond dropped from over 4.3% in 2018 to around 2.2%, insurance funds could no longer find assets whose coupons could cover the liability costs. Therefore, on the one hand, they are reducing the comprehensive liability cost, and on the other hand, they are increasing the allocation of equity assets to increase returns.
Liu Hui, the vice - president and board secretary of China Life Insurance, once mentioned the company's investment strategy: Equity investment is the key to improving returns, fixed - income investment is the ballast for stable returns, and alternative investment is the growth pole for enriching returns.
“The scale of high - yield renewal policies in the past was large, and there is a lag in the adjustment of the scheduled interest rate of new policies, which has continuously increased the difficulty of matching liability costs with investment returns,” Li Hong admitted. In recent years, as bond coupons have declined, the proportion of non - standard assets in the company's investment portfolio has continued to fall, and the proportion of equity assets has continued to rise, the pressure on the investment side has been increasing. They have to face the dilemma of insufficient supply of high - quality assets and the reality of rising stock market valuations, and the difficulty of finding assets with relative valuation advantages, growth potential, and high dividends has also increased. This is the reason why he is looking for talents in the technology - growth direction.
In the view of Zhu Junsheng, a post - doctoral fellow in applied economics at Peking University, investing in technology companies and growth - oriented companies poses high requirements for insurance companies' investment research capabilities and in - depth industry research. Short - term market fluctuations may lead to large fluctuations in investment returns, and the valuations of technology companies are affected by multiple factors such as policies, innovation cycles, and market sentiment. Insurance companies must have a professional research team and a systematic investment process to obtain long - term returns while controlling risks.
Digging for Dividend Assets
Another challenge Li Hong faces is dealing with the performance fluctuations caused by the fluctuations of equity assets under the new accounting standards.
“The high volatility of equity assets is inherently contradictory to the requirements of insurance funds for safety and stability. After the implementation of the new accounting standards, the asset side is required to reflect market fluctuations in a timely manner, which in turn affects short - term performance,” Li Hong admitted. In actual operations, how to adjust the proportion of FVTPL (financial assets measured at fair value through profit or loss) and FVTOCI (financial assets measured at fair value through other comprehensive income) assets in stock investments to achieve a balance between long - term operations and short - term financial performance still needs to be explored.
In Li Hong's view, although equity assets show the characteristic of rising and falling together in terms of absolute returns, there are still significant differences among different types of assets such as broad - based large - cap indices, value - dividend stocks, growth - oriented funds, and broad - based small - cap indices in terms of relative returns. This poses higher requirements for tactical asset allocation.
Li Hong and his team are also constantly improving the strategic allocation framework and dynamically adjusting the portfolio strategy structure to avoid the market adjustment risks caused by over - heated market sentiment and imbalanced short - term supply - demand structures in some strategies and sectors.
The holding situation of insurance funds is also changing subtly.
A research report from CITIC Construction Investment analyzed the holding situation of insurance funds in the first quarter and found that although the holdings of insurance funds are mainly in the financial sector, the concentration of allocation has decreased, and the industry layout has become more balanced.
Specifically, the non - banking financial sector remains the largest overweight sector for insurance funds, but its proportion has declined, while the proportion of banks has increased significantly. Insurance funds have significantly increased their allocation to defensive and consumer sectors such as power and public utilities, transportation, household appliances, and food and beverages, and reduced their holdings in non - banking financial, communication, and non - ferrous metal sectors. Overall, they have adjusted their positions around the main lines of high dividends, stable cash flows, and consumer recovery, showing a configuration feature of both offense and defense and moderate diversification.
During the growth of equity assets, the leading insurance companies with a higher proportion of premiums are the main force for increasing positions. Data shows that China Life Insurance still occupies an absolute dominant position with a holding scale of 908.955 billion yuan, and Ping An Insurance of China ranks second with 233.904 billion yuan. Meanwhile, Ruizhong Life Insurance, China Pacific Insurance, and New China Life Insurance have also achieved growth in their holding scales of 120.17%, 20.47%, and 18.02% respectively.
Li Hong said that in the operations of the first quarter, while allocating high - dividend and high - yield targets, he has also been continuously expanding the scope of research and attention to explore investment opportunities in individual stocks with stable fundamentals and dividend attributes in industries such as consumption, medicine, and the Internet.
The investment strategies of different insurance companies also show different characteristics. A research report from CITIC Construction Investment shows that in the first - quarter increase in positions, China Life Insurance shows a more obvious feature of spreading from bank core positions to consumer manufacturing and transportation dividends; Ping An Insurance of China shows a configuration feature of “stable bank core positions and enhanced public dividends”; the market value of Ruizhong Life Insurance's holdings increased from 14.616 billion yuan at the end of 2025 to 32.181 billion yuan at the end of the first quarter of 2026, with Industrial Bank as the largest position, and it also increased its holdings in industries such as machinery, medicine, food and beverages, household appliances, and power; New China Life Insurance, while maintaining its medicine core position, increased its allocation to banks, electronics, and medicine, reflecting a balanced strategy of balancing between banks and technology - growth; China Pacific Insurance shows a distinct “transportation + public utilities” configuration feature compared with other institutions; and China Taiping has significantly increased its allocation to banks, central and state - owned enterprises, and high - dividend varieties.
This article is from the WeChat official account “Economic Observer”. Author: Jiang Xin. Republished with permission from 36Kr.