Latest data from the National Financial Regulatory Administration reveals that by the end of 2025, the proportion of stock allocations in insurance institutions' total fund utilization reached a four-year high. Concurrently, a survey from the China Banking and Insurance Asset Management Association signals a significant increase in confidence among banking and insurance institutions towards equity asset allocations for 2026 compared to the previous year. This clearly outlines a pivotal shift in insurance capital allocation—accelerating the formation of a balanced "fixed income plus equity" model, moving away from the previous dominance of fixed income alone.

This record-high stock allocation ratio and the simultaneous strengthening of confidence in equity assets are the inevitable result of a confluence of three factors: policy guidance, return objectives, and market expectations. This trend will also enhance the institutionalization of China's capital markets and further deepen the philosophy of long-term and value investing.

Firstly, policy relaxation has created allocation space, providing the institutional confidence for insurers to increase their positions. In recent years, regulatory authorities have continuously optimized the rules governing insurance capital's equity investments. A series of measures, including raising the upper limit for allocation ratios, adjusting risk factors for stocks held long-term, and implementing long-cycle assessment mechanisms, have effectively reduced capital occupancy costs and mitigated the impact of short-term market fluctuations. This has made insurers more willing, confident, and committed to long-term allocations in equity assets. The clear policy direction of "encouraging long-term capital to enter the market" provides a favorable environment for insurers to increase their stock exposure, making the rise in stock allocation ratios sustainable.

Secondly, the low-interest-rate environment and the scarcity of high-yielding assets are compelling a structural adjustment in asset allocation, serving as the practical motivation for insurers to increase their equity holdings. Over the past two years, yields on traditional fixed-income assets have continued to decline, while the supply of high-yield non-standard assets has contracted. Relying solely on bonds and deposits has become insufficient to cover the liability costs of insurance funds and meet their return targets. Furthermore, the long duration and rigid cost structure of insurance capital necessitate finding assets that can withstand economic cycles while offering favorable return potential. Driven by strong policy support, persistently accommodative liquidity conditions, and marginal improvements in economic fundamentals, China's capital market has shown sustained positive development. Consequently, stock assets have become a crucial tool for insurers to hedge against declining market interest rates and optimize their investment portfolios.

Finally, market recovery and improved corporate earnings expectations have further solidified the consensus among insurers to increase stock allocations. In 2025, structural opportunities in the A-share market became prominent, and corporate profits gradually recovered, delivering substantial portfolio gains for insurers. This created a virtuous cycle of "improved returns - enhanced confidence - continued allocation increases." Insurance institutions generally focused on themes like new quality productive forces and sectors with recovering prospects, enhancing their investment research capabilities to identify high-quality targets aligned with both national strategy and industrial trends. This approach makes equity allocation more targeted and effective.

As patient capital with an approximate volume of 38.5 trillion yuan, the continued increase in allocations to stocks and other equity assets by insurers not only solidifies their own cyclical earnings resilience but also brings long-term, stable incremental funds to the A-share market, better fulfilling its role as a "ballast" and "stabilizer."

Looking further, the transformation on the liability side of insurers and changes in accounting standards are profoundly reshaping their investment behavior. In recent years, insurance companies have vigorously promoted product transformation, with floating-return products like participating insurance becoming mainstream. This further reduces the rigid costs on the liability side, providing greater flexibility for asset-side deployment. Simultaneously, with the full implementation of new accounting standards, the impact of fair value changes in insurers' assets on their profits and solvency has become more direct. Consequently, insurers are more inclined to allocate to high-quality assets characterized by high dividends, low volatility, and stable cash flows. This strategy helps control volatility while realizing long-term returns, forming a "steady yet progressive" allocation style that deepens the value investing philosophy.

Considering regulatory policies and the experience of mature international markets, there remains significant room for growth in the stock allocation ratio of China's insurance funds. As policies continue to optimize, the market ecosystem improves, and insurers' investment research capabilities advance, insurance capital will approach equity asset allocation with a more rational, focused, and long-term perspective. This will not only reshape the utilization pattern of insurance funds but also propel China's capital market into a new stage characterized by greater maturity, stability, and enhanced value discovery capabilities, injecting sustained momentum into the virtuous cycle between the real economy and the capital market.