A total of 2.25 trillion yuan. This is the latest milestone for the overseas investment of insurance funds. The most recent survey by the China Banking and Insurance Asset Management Association shows that in 2025, insurance funds' overseas investment totaled 2.2462 trillion yuan, crossing the 2.2 trillion yuan threshold for the first time, accounting for 5.4% of total industry assets. Among this, the balance of Stock Connect investment doubled within a year, reaching 1.61 trillion yuan, with a financial yield of 11.9%. What truly matters about these numbers is not their absolute size, but that for the first time they have transformed insurance capital's overseas expansion from a strategic direction at the industry level into an actual asset allocation outcome. Currently, domestic government bond yields are hovering at low levels, and the pressure from negative spreads on the liability side of insurers persists. Therefore, for insurance capital going abroad, the question has shifted from whether to go and whether it can go, to how best to go. On one hand, there is sustained pressure from the scarcity of domestic assets under a low interest rate environment; on the other, there is the practical problem of insufficient QDII quotas. However, as policy channels for insurance capital going abroad have been continuously broadened in recent years, especially with the opening of insurance fund investment in Hong Kong Stock Connect ETFs in September this year, the global allocation capabilities of insurers are facing a more direct test. For insurance institutions, what truly determines the quality of their overseas ventures is whether they can generate returns.

Scale Changes: Dual Tracks Running in Parallel, Stock Connect Becomes the Main Driver

Currently, insurance capital's overseas investment operates on a dual-track structure: one track involves foreign exchange investments such as QDII, ODI, and domestic guarantee for overseas loans; the other involves investments under interconnection mechanisms such as Stock Connect and the southbound Bond Connect. In terms of foreign exchange investment, the survey by the China Banking and Insurance Asset Management Association shows that by the end of 2025, 37 insurance institutions conducted overseas investment through foreign exchange, with a balance of 90.129 billion US dollars, equivalent to approximately 633.5 billion yuan, up 13.9% year-on-year, with an average financial yield of 5%, recovering by 1 percentage point from the previous year. Among this, QDII remains the main force for outbound investment, accounting for 58%, but this is a significant decline from 70% in 2024. This is mainly due to changes in the overall outbound scale, as new channels such as overseas bond issuance and domestic guarantee for overseas loans have enlarged the denominator. As of the end of June 2026, approved QDII quotas for the insurance sector totaled 40.643 billion US dollars, accounting for 23.07% of the entire market, and rose further to 42.003 billion US dollars in the first eight months. In terms of interconnection, the total scale of insurance capital invested in Hong Kong stocks in 2025 was 1.65 trillion yuan. A total of 127 insurance institutions conducted Stock Connect investments, with a total of 1.61 trillion yuan, accounting for 98%, indicating that only 2% used QDII quotas. In June 2026, after the launch of southbound Bond Connect, asset management entities such as China Life Asset Management, Ping An Asset Management, Taikang Asset Management, PICC Asset Management, CPIC Asset Management, and Taiping Asset Management successively completed their first transactions. For example, Ping An Asset Management allocated approximately 2 billion Hong Kong dollars, and Taikang Asset Management allocated approximately 120 million US dollars. In July, the annual net quota for southbound Bond Connect across the entire market was raised from 500 billion yuan to 800 billion yuan. In terms of industry distribution, the top ten Stock Connect investments in 2025 were, in order, financials, energy, telecommunications, information technology, consumer discretionary, utilities, industrials, healthcare, materials, and real estate construction. The financial yield of Stock Connect in 2025 was 11.9%. Although it declined from 15% in 2024, this return can be considered excess in the context of increased volatility in domestic equity markets. In terms of regional distribution, insurance capital's overseas assets are highly concentrated in Hong Kong, the United States, and Europe, accounting for 41%, 20%, and 19% respectively, with allocation concentration remaining relatively high. Looking further back, the changes in the scale of insurance capital's overseas investment are quite evident. In 2004, regulators first allowed insurance foreign exchange funds to invest overseas, but the permitted scope was limited to low-risk varieties such as bank deposits and notes. In 2012, the Detailed Rules for the Implementation of the Interim Measures for the Administration of Overseas Investment of Insurance Funds set the upper limit for overseas investment at 15%. In 2016 and 2017, the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect were successively opened to insurance capital. By the end of 2021, the scale of insurance capital's overseas investment accounted for about 2% of the industry's total capital utilization balance. In just four years, it grew from less than 500 billion yuan to 2.2 trillion yuan, with its proportion rising from 2% to 5.4%, more than quadrupling in scale. However, compared with the 15% regulatory cap, there is still a considerable gap.

Driver Changes: In a Low Interest Rate Era, Globalization Is Not a Choice but Arithmetic

Why has insurance capital suddenly accelerated its overseas expansion? The answer lies in the arithmetic of the balance sheet. As of the second quarter of 2026, the current balance of insurance capital utilization has exceeded 40 trillion yuan, with bond allocation accounting for nearly 50%, while the 10-year government bond yield has long hovered around 1.7%, and the 30-year yield is only slightly above 2%. From the perspective of negative spreads, for life insurance companies with extremely rigid liability costs, there is rigid policy cost on one side and continuously declining asset returns on the other, and the risk of negative spreads is growing. At the same time, life insurance liabilities generally have durations of 10 to 20 years, while the supply of long-term high-quality domestic assets is insufficient, making it difficult to bridge the duration gap. This is the real challenge of 40 trillion yuan in funds facing asset supply. Overseas markets offer a way out. The Hong Kong market gathers a large number of ultra-long-term bonds with maturities of 20 to 30 years, and they have a clear spread advantage over comparable domestic bonds. This means insurance institutions can extend asset duration while obtaining coupon income higher than domestic bonds of the same rating. From the perspective of return data, survey data shows that in 2025, 66% of insurance institutions had overseas investment returns higher than their overall company investment returns, and overseas investment has transformed from a supplementary item in the past into a genuine enhancement item. When an asset allocation route consistently outperforms the portfolio average for multiple consecutive years, it is only a matter of time before capital votes with its feet. Therefore, going abroad is no longer an option but a necessity at the return level. In addition, the acceleration on the policy side is equally critical. Since 2026, the State Administration of Foreign Exchange has expanded QDII quotas twice, in March and August, adding a total of 12.14 billion US dollars, of which the insurance industry was newly approved for 2.68 billion US dollars. The above six insurance asset management companies were approved in June to participate in Bond Connect southbound, which also means insurance capital for the first time directly connected to the Hong Kong bond market through an institutionalized channel. On August 18, Xiao Yuanqi, Vice Director of the National Financial Regulatory Administration, stated at a public event that mainland insurance institutions would be supported in investing in Hong Kong ETFs through the Shanghai-Hong Kong-Shenzhen Stock Connect. Just 32 days later, on September 20, the regulatory stance was officially implemented, and multiple insurers received the Letter on Clarifying the Regulatory Stance for Insurance Funds Investing in Hong Kong Stock Connect ETFs. The document is clear and unambiguous: insurance institutions that meet the regulatory requirements for Hong Kong Stock Connect stock investment may all conduct Hong Kong Stock Connect ETF investment, and the investment regulatory requirements shall be implemented with reference to the relevant regulatory provisions for insurance funds investing in Hong Kong Stock Connect stocks, with the rules taking effect officially from the date of document issuance. As a result, eligible 60 (60% allocated to Hong Kong stocks) / 40 (40% allocated to overseas) ETFs have become a new tool for insurance capital to allocate overseas assets, broadening cross-border allocation channels and matching the diversified allocation needs of insurance capital. This means insurance capital has gained another standardized tool that does not consume QDII quotas. Data from Hong Kong Exchanges and Clearing shows that as of September 30, a total of 31 ETF funds were included in the Stock Connect scope, with a total scale exceeding 300 billion yuan, all equity-type, covering broad-based, technology, dividend high-yield, and cross-market strategies.

Capability Changes: From Quota Anxiety to Capability Anxiety

In the past, the most troublesome problem for insurance capital going abroad was insufficient quotas, with QDII quotas tight and approval uncertain. Now the situation is clearly different. The annual total quota for southbound Bond Connect has been raised from 500 billion yuan to 800 billion yuan equivalent in RMB, with a daily quota of 20 billion yuan under a first-come-first-served mechanism, and individual institutions are no longer subject to rigid fixed quotas. On September 20, Hong Kong Stock Connect ETFs were implemented, and this channel has no QDII quota restrictions. It can be said that quota anxiety is gradually disappearing, and the deeper issue is capability anxiety. The first hurdle is currency risk, an unavoidable obstacle. Domestic insurers' liabilities are all in RMB, and after the investment side is switched to US dollar- and Hong Kong dollar-denominated assets, the hard-earned coupon income can easily be swallowed by exchange losses. Even if overseas high-yield bonds look attractive, without hedging, if the RMB appreciates by just a few points, there will not be much profit left in the end. The second hurdle is geopolitical risk, which is an important consideration. Overseas investment must adapt to different markets' capital control rules, regulatory requirements, and political cycles, and identifying risks is far more difficult than domestically. The third hurdle is credit screening, which faces a major test. The Chinese dollar bond market occasionally sees defaults, and overseas rating systems differ considerably from domestic ones, so focusing only on external ratings can easily lead to pitfalls; some niche bonds inherently have little trading volume, and liquidity risk must not be taken lightly. The fourth hurdle is that the participation threshold for small and medium-sized insurers still exists. The first batch of southbound Bond Connect pilots was basically concentrated among top-tier institutions. Small and medium-sized insurers not only have RMB liabilities but also have few eligible targets they can invest in, so in the short term most can only participate indirectly through pooled products. These capability shortcomings directly determine where insurance capital's overseas expansion should go after 2.25 trillion yuan. Insurance capital going abroad must shift from being pushed by quotas to being supported by capabilities, and gradually upgrade from supplementary allocation to structural allocation. Specifically, it is necessary to establish a country-level tiered access system early on and form a full-chain hedging system covering currency, interest rates, and credit. At the same time, it is necessary to build an independent overseas investment research and risk control framework, not blindly allocating fully just because US dollar bonds have higher coupons, nor restricting RMB funds to the domestic market for the long term out of fear of risk. Compared with international markets, the proportion of overseas investment by UK insurance capital is roughly 37% to 40%, and Japan's is about 20%, while domestic insurance capital is currently still in the single digits. The 2.25 trillion yuan is only a starting point for insurance capital going abroad. For the entire industry, the real test is not to push the scale up by a few more percentage points, but to truly polish going abroad into a hardcore capability that helps the industry navigate cycles under the triple pressures of declining interest rates, geopolitical fragmentation, and currency volatility. Therefore, in the end, global allocation is never about money going out, but about capabilities catching up.