Orient Securities Company Limited released a research report stating that the scale of insurance fund utilization continues to expand steadily, with ongoing improvements in asset allocation flexibility and duration matching capabilities. By the end of Q1 2026, the total balance of insurance fund utilization maintained growth, bond allocations remained at a high proportion, and the scale of stocks and funds still achieved positive growth despite market fluctuations, reflecting the resilience of insurance fund asset allocation. With continuous inflows of premium cash flow from the liability side, insurers are expected to further enhance duration matching, increase allocations to standardized assets, and optimize equity asset holdings, which should strengthen both portfolio stability and return potential. Following recent adjustments, the insurance sector's valuation has become more attractive. Coupled with marginally stabilizing macro expectations, the continuous entry of medium-to-long-term funds into the market, and the recovery of equity markets, the sector offers a combination of low valuation, improving liability-side fundamentals, and potential investment-side elasticity. Orient Securities Company Limited suggests paying attention to medium-to-long-term allocation opportunities after the sector's correction. The main points of the report are as follows:

The balance of insurance fund utilization continues to grow, with life insurance remaining the core source of incremental growth. On May 15, the National Financial Regulatory Administration disclosed the fund utilization situation of insurance companies for the first quarter of 2026. By the end of Q1 2026, the total balance of insurance fund utilization reached 39.4 trillion yuan, a year-on-year increase of 12.9% and a 2.5% increase from the beginning of the year. Specifically, the fund utilization balance of life insurance companies was 35.6 trillion yuan, up 13.3% year-on-year and 2.6% from the start of the year. The fund utilization balance of property insurance companies stood at 2.5 trillion yuan, a year-on-year increase of 8.8% and a 2.3% rise from the beginning of the year. Supported by sustained premium cash flow from the liability side, the asset scale of the insurance industry continues to expand steadily.

Equity asset scale increased against the trend, with the proportion of stocks and funds remaining high. By the end of Q1 2026, the combined balance of stocks and securities investment funds held by life and property insurance companies totaled 5.9 trillion yuan, an increase of 201 billion yuan from the beginning of the year, accounting for 15.5% of the total fund utilization balance, up 0.1 percentage point from the start of the year. Within this, the stock balance was 3.8 trillion yuan, an increase of 102.5 billion yuan from the beginning of the year, accounting for 10.1%, unchanged from the start of the year. The balance of securities investment funds was 2.1 trillion yuan, an increase of 98.5 billion yuan from the beginning of the year, accounting for 5.4%, up 0.1 percentage point from the start of the year. Considering the periodic volatility in the equity market during Q1 2026, the positive growth in insurance funds' equity allocation scale demonstrates the resilience of medium-to-long-term capital allocation.

The proportion of bond allocations remains high, with asset structure continuing to shift towards standardized assets. By the end of Q1 2026, the bond allocation balance of life and property insurance companies was 19.2 trillion yuan, accounting for 50.5% of the total fund utilization balance, up 0.1 percentage point from the beginning of the year. Bank deposits accounted for 8.1%, down 0.1 percentage point from the start of the year. Other assets accounted for 18.0%, down 0.3 percentage points from the beginning of the year. Against the backdrop of low and fluctuating long-term interest rates, the demand for insurance funds to extend duration and secure stable coupon income through bond allocations remains strong. The proportion of non-standard and other assets continues to be compressed, and the trend towards standardized asset allocation structures persists.

Looking ahead, a recovery in the Q2 equity market is expected to drive improvements in investment-side expectations. Since Q2 2026, the equity market has shown signs of recovery, with growth-style stocks rebounding more noticeably. This is expected to support the recovery of the fair value of insurers' TPL accounts and their comprehensive investment yield. In the medium term, the low-interest-rate environment will continue to constrain reinvestment returns from fixed income. While maintaining duration matching in bond portfolios, insurance funds are expected to further enhance portfolio return stability through allocations to high-dividend equity assets, OCI accounts, and quality equity investments. Investment-side performance remains a key variable for the valuation recovery of the insurance sector.

Risk factors include a sharper-than-expected decline in long-term interest rates; substantial volatility in equity markets; life insurance channel reforms falling short of expectations; weaker-than-expected household income; changes in regulatory policies; and slower-than-expected transformation of product structures.