As interest rates continue to decline and capital markets attract attention, how to respond to the new low interest rate cycle has become a key issue for insurance funds. As of August 31st, with the completion of the interim reporting season, the investment portfolios of five major A-share listed insurers - Ping An Insurance (Group) Company Of China, Ltd., China Life Insurance, China Pacific Insurance, People's Insurance Company of China, and New China Life Insurance - were fully disclosed.

From the investment perspective, all insurers achieved growth in their investment assets compared to the beginning of the year during the first half. Among the increased investment assets, equity assets were particularly favored. The low interest rate environment has posed new requirements for asset-liability matching of life insurance companies. Management teams from multiple insurers indicated that against the backdrop of pressure on fixed-income asset returns, exploring diversified assets and increasing allocation to equity assets, particularly high dividend assets, has become an important component of listed insurers' asset allocation strategies. Additionally, insurers are focusing on identifying growth targets to capture excess returns.

**Increased Equity Allocation Enhances Returns**

Investment performance has always been the decisive factor in insurance companies' overall performance. As of the end of June, the combined investment assets of the five major A-share listed insurers totaled 19.73 trillion yuan, representing a year-on-year increase of 7.52%.

In the first half of this year, capital markets showed signs of recovery, creating favorable conditions for improving insurance companies' investment returns. Multiple insurers disclosed investment return indicators that showed significant growth compared to the first half of 2024, though some individual insurers experienced declining investment yields.

Although companies disclosed data using different criteria, overall investment performance can be observed through investment income and return rate indicators. Specifically, People's Insurance Company of China achieved an annualized total investment return rate of 5.1% in the first half, up 1 percentage point year-on-year; China Life Insurance's total investment return rate was 3.29%; China Pacific Insurance's total investment return rate was 2.3%, down 0.4 percentage points year-on-year. The three companies achieved total investment returns of 41.478 billion yuan, 127.506 billion yuan, and 56.889 billion yuan respectively in the first half, with growth rates of 42.7%, 4.2%, and 1.5% respectively.

From the interim report data, while each insurer has different focuses in optimizing asset allocation, all have significantly increased their allocation to equity investments. For instance, Ping An Insurance (Group) Company Of China, Ltd.'s stock investment ratio reached 10.5%, compared to 7.6% in the same period last year; China Life Insurance's equity financial assets amounted to 1.43 trillion yuan in the first half, an increase of 156.5 billion yuan from the beginning of the year. Among these, stock assets reached 620.137 billion yuan, an increase of 119.054 billion yuan from the beginning of the year.

Regarding the future investment environment, banking sector researcher Wu Zewei predicted that in the bond market, the low interest rate environment may continue, and while government bonds have safety margins, yields are under pressure. For insurers, there is an urgent need to address the dual challenges of return requirements and risk control through refined asset-liability management.

For the stock market, private fund manager Wang Zhaojiang noted that current A-share market valuations are generally reasonable, the market bottom is relatively solid, and positive factors are accumulating. Chinese enterprises' spontaneous "anti-involution" has begun, with corporate net profit margins' lower limit basically confirmed and profit margins recovering. The manufacturing PMI of major global economies has begun to return above 50, with manufacturing outperforming services, which benefits the profit recovery and valuation improvement of China's advantageous manufacturing industries.

**Focus on High Dividend Stocks**

Against the backdrop of declining macro interest rates and scarce quality assets, the advantages of insurance funds as "long-term money for long-term investment" are being re-examined by the market. Considering asset-side return matching and liability-side duration management, the investment roadmaps of insurance giants are becoming clearer, focusing on high dividend assets that combine stable cash flows with defensive characteristics.

Regarding investment strategies for 2025, multiple insurers are optimistic about this year's capital market performance and have indicated they will increase insurance fund market participation.

New China Life Insurance Vice President Qin Hongbo stated that in equity investment, under current conditions, New China Life's equity investment strategy involves obtaining long-term stable excess returns through optimized allocation structure while effectively controlling volatility.

China Pacific Insurance Vice President Su Gang mentioned that the low interest rate market environment has led to insufficient supply of quality assets, creating significant allocation pressure for insurance funds. Currently, domestic equity assets have medium to long-term investment value, and insurance funds face more opportunities in equity investment.

China Life Insurance Vice President and Board Secretary Liu Hui also indicated that since last year, China Life has been firmly optimistic about equity investment market opportunities and has increased investment efforts. In the first half, the company added over 150 billion yuan in new equity asset allocation. Based on this allocation strategy, the company will continue steady allocation according to asset allocation needs and optimize equity investment structure. Currently, the equity investment ratio aligns with the company's asset allocation center, and future equity allocation will pay more attention to high dividend stock allocation.

In equity asset investment, high dividend stocks and growth sectors are key focuses of insurers' investment layouts. Ping An Insurance (Group) Company Of China, Ltd. Co-CEO Xie Yonglin stated: "As patient capital and long-term capital, we will moderately increase equity asset allocation. We focus on two key areas: growth sectors representing new productive forces, and high dividend value stocks."

Liu Hui also mentioned similar allocation thinking, stating that in equity investment, they will actively implement requirements for medium to long-term fund market entry, continuously optimize equity allocation structure, focus on new productive forces and quality high dividend stock allocation, and continuously enhance the stability and long-term return potential of equity allocation. They will continue to monitor sector rotation in rising market segments, including investment opportunities in technology innovation, advanced manufacturing, new consumption, and overseas enterprises.

High dividend assets can provide stable cash flows, meeting insurance funds' demand for stable returns, and also help smooth profit volatility under new accounting standards. Technology innovation, advanced manufacturing, and new consumption are considered important investment opportunities, aligning with China's economic transformation and upgrade and global manufacturing recovery macro background.

In insurers' search for high dividend assets, "insurers holding insurers" has been a unique phenomenon this year. Recently, Ping An Insurance (Group) Company Of China, Ltd. successively increased holdings in China Pacific Insurance H shares and China Life Insurance H shares. Ping An Insurance (Group) Company Of China, Ltd. Co-CEO Guo Xiaotao stated that when investing in peer companies and other industry companies, they adhere to the "three feasible" principles: reliable operations, expected growth, and sustainable dividends. These are core standards for measuring whether investment in an enterprise can be sustained long-term and whether the company's stock can be held stably.

In recent years, long-term fund investment by insurance capital has been a highly watched investment attempt and exploration in the industry. China Life Insurance, together with New China Life Insurance, established Honghu Zhiyuan (Shanghai) Private Securities Investment Fund Co., Ltd. in February 2024. According to both companies, the fund's investment scope includes A+H shares of eligible large listed companies among CSI A500 index constituents. Target company standards include good governance, stable operations, relatively stable dividends, and good liquidity.

**Exploring Diversified Assets**

Fixed-income investment has always been the "ballast stone" of insurance capital allocation. As of the end of the second quarter of 2025, bond investments' proportion of total insurance fund utilization remains at historical highs. From various companies' statements, they will continue to maintain strategic determination and properly match ultra-long-term bonds across cycles.

For instance, Qin Hongbo mentioned actively strengthening fixed-income investment trading capabilities, achieving "fixed income plus" through multi-variety, multi-strategy combinations and capturing trading opportunities to enhance overall portfolio returns.

People's Insurance Company of China also mentioned strengthening judgment capabilities on medium to long-term interest rate trends in fixed-income investment, actively seizing allocation and trading opportunities brought by interest rate fluctuations, effectively extending asset duration, and enhancing investment returns.

After establishing stability on the fixed-income side, funds naturally seek returns from higher-elasticity equity assets. Regarding other investments, Su Gang stated that the company continues to increase allocation to long-term government bonds, reasonably extend fixed-income asset duration, while also increasing layout of innovative quality assets including ABS and public REITs. Meanwhile, they steadily increase allocation to public market equity assets and unlisted equity alternative assets.

China Life Insurance has set its sights on overseas markets. Liu Hui stated that the Hong Kong stock market is an important component of the company's equity investment allocation. In the first half, Hong Kong stock valuations continued to recover, with Hong Kong stock gains leading major global equity indices. Against the backdrop of declining US dollar credit and global capital rebalancing, Hong Kong stocks have allocation value in new economy and high dividend quality assets. China Life achieved very good returns in the Hong Kong stock market in the first half and will continue to focus on the Hong Kong stock market in the second half, continuing investment operations.