As a key source of long-term capital in the market, insurance funds are quietly reshaping their investment landscape. Latest industry data from the financial regulator shows that as of the end of the second quarter, total insurance fund balances in use surpassed the 40 trillion yuan milestone, reaching a record 40.82 trillion yuan.
While this steady growth continues, the long-standing "fixed income first" allocation structure persists. Compared with the end of the first quarter, bond allocation ratios remained stable, while the proportion of equity investments and securities investment funds—both risk assets—continued to climb, highlighting insurers' proactive adjustments to seek better returns in a low-interest-rate environment.
Insurance fund balances break 40 trillion yuan for the first time
Regulatory data released recently shows that as of the end of the second quarter, total insurance fund balances in use stood at approximately 40.82 trillion yuan, with life insurers accounting for about 36.87 trillion yuan and property insurers around 2.54 trillion yuan. From surpassing 30 trillion yuan in the second quarter of 2024 to exceeding 40 trillion yuan by the second quarter of 2026, insurance capital has expanded by 10 trillion yuan in just two years.
Why has the growth been so remarkable? Fu Yifu, a special researcher at Su Shang Bank, noted that on the liability side, residents' risk appetite has turned more conservative, keeping savings-type insurance products in strong demand and premium income growing steadily, which provides a continuous supply of funds for the asset side. On the asset side, regulatory policies have gradually eased investment restrictions, enriching the range of available investment options and significantly enhancing capital absorption capacity. The combined effect of these factors means that new capital has not been left idle despite the asset shortage environment, but instead is flowing into various markets at an accelerated pace, creating a positive cycle of ever-expanding scale.
According to the latest disclosed figures, in the first half of 2026, the insurance industry generated 3.9 trillion yuan in original premium income, up 3.2% year-on-year, with new policy count reaching 66.8 billion, a surge of 27.4%. Industry insiders point out that with improving asset allocation capabilities and a progressively refined investment framework, insurance funds—as key long-term institutional investors and patient capital—are serving the high-quality development of the real economy with precision and efficiency through diversified allocation strategies.
Fixed income as foundation, equities as growth driver
In capital market deployment, insurance funds are adopting a barbell strategy—bonds provide the stable base while equities deliver growth—with the share of equity investments rising steadily, positioning insurers as stabilizers of the capital markets. Specifically, the combined bond allocation ratio for life and property insurers remained elevated and stable at 50.52% at the end of the second quarter, unchanged from the end of the first quarter. Fixed income assets have always been the ballast of insurance capital, especially in a low-rate environment, where insurers extend asset duration and match liabilities by increasing holdings of long-duration government bonds and high-quality credit bonds, thereby alleviating reinvestment pressure.
On top of this fixed income foundation, equity allocation has continued to expand. As of the end of the second quarter, life insurers' stock investment ratio reached 10.47% and property insurers' 9.52%, both higher than at the end of the first quarter while remaining at elevated levels. In Fu Yifu's view, the rise in equity allocation is not purely a result of active buying. On one hand, current bond yields can no longer cover insurers' liability costs, forcing capital to seek excess returns in the equity market—particularly high-dividend assets that offer bond-like, stable cash flows. On the other, regulators continue to encourage long-term capital to enter the market, and insurers, as among the largest institutional investors, must respond to policy direction. These two forces combined are driving a structural upward trend in equity allocation.
Guosen Securities research also noted that since 2025, participating policies with wealth-management features have sold well, bringing in substantial, longer-dated funding sources. These funds demand higher investment returns, which in turn requires insurers to increase risk appetite in asset allocation—adding equities to strive for greater long-term returns that match liability costs and meet client expectations.
When it comes to actual deployment in the secondary market, where exactly are insurance funds heading? Data compiled from A-share top-ten circulating shareholder filings reveals that sectors such as financials, utilities, electronic equipment, and transportation attracted insurer interest in the second quarter, with high dividend yields and strong growth potential remaining the core logic behind stock selection.
Looking ahead, driven by policy support and liability-side momentum, insurance funds are highly likely to continue increasing equity allocation in 2026, becoming one of the market's key incremental sources. A recent survey reinforces this view: the China Banking and Insurance Asset Management Association's second-quarter 2026 asset allocation outlook shows that most institutions hold a fairly optimistic view of the A-share market for the second half of 2026, with a consensus expectation of volatile upward movement. Half of the institutions believe current A-share valuations are broadly reasonable, providing a foundation for structural positioning. For the latter half of 2026, tech growth sectors emerge as the primary overweight target, with institutions favoring electronics, communications, and other tech sectors, centered on technology growth, AI computing power, and chip semiconductors as core investment themes. High-dividend yield assets serve as a steady allocation base, while the AI industrial chain is covered across upstream, midstream, and downstream, forming a complete technology allocation framework. In terms of strategy, most institutions plan to modestly increase equity allocations.