In recent developments, major insurance companies in China have been actively purchasing shares in their industry peers, sparking discussions about the motivations and implications of such cross-shareholding.
Ping An Insurance (Group) Company Of China, Ltd. (ASX: 601318)
Ping An Life Insurance announced that its asset management arm, investing on its behalf, has increased its stake in China Life Insurance's H-shares to 15% of the issued share capital as of May 20, 2026, triggering a disclosure requirement under Hong Kong market rules. According to the latest exchange filings, Ping An Life purchased approximately 43.261 million China Life H-shares on that date at an average price of HK$29.2505 per share, involving a total consideration of about HK$1.265 billion. Following this transaction, its total holding reached approximately 1.155 billion shares, representing a 15.51% stake.
This marks the third time Ping An Life has triggered such a disclosure for China Life H-shares. The first instance occurred in August 2025 when its holding reached 5%, followed by a second in February 2026 when it crossed the 10% threshold.
Concurrently, while Ping An's funds have been consistently buying China Life shares, China Life has also been increasing its position in Ping An. According to Ping An's public disclosures, in the first quarter of 2026, China Life, through one of its investment product accounts, raised its stake in Ping An's A-shares to 249 million shares, a 1.38% ownership interest, making it the tenth-largest shareholder.
Beyond this reciprocal buying between the two giants, Ping An has made multiple purchases of China Pacific Insurance's H-shares since last year. Furthermore, New China Life Insurance has become a top-ten circulating shareholder and the fifth-largest shareholder of The People's Insurance Company (Group) of China Ltd.
This raises the question: why are insurance funds vying to become shareholders in their peers, and what impact does this have on the industry's development?
Major Insurers Increase Stakes in Rivals
Ping An has been notably active in acquiring shares of fellow insurers on the secondary market.
As early as August 12, 2025, Ping An Life bought 3.662 million China Pacific Insurance H-shares, raising its holding from 4.97% to 5.10% and triggering a disclosure. The very next day, it purchased 14.067 million China Life H-shares, increasing its stake from 4.99% to 5.18%, also triggering a disclosure.
The pace of accumulation accelerated thereafter. Within August 2025 alone, Ping An Life added to its China Life position four times, quickly raising its stake to 8.13% by the end of the month. By February 3, 2026, its holding surpassed 10%, and further purchases in April lifted it to 11.07%.
The buying intensified in May 2026, with Ping An's asset management arm and the parent company executing several large transactions, ultimately pushing the total stake past 15%.
While Ping An was aggressively buying China Life shares, China Life was simultaneously increasing its investment in Ping An, becoming a top-ten circulating shareholder in Ping An's A-shares in the fourth quarter of 2025 and further raising its stake to about 1.38% in Q1 2026.
Separately, New China Life Insurance, through two of its product accounts, holds a combined approximately 178 million A-shares of PICC Group, making it the company's fifth-largest shareholder.
Key Drivers Behind the Cross-Shareholding Trend
Several key factors are driving this wave of mutual purchases among insurers that began in the latter half of last year.
Firstly, it appears to be an inevitable choice in an environment of asset scarcity. With the yield on the 10-year government bond lingering around 1.75%, below the assumed interest rates of many existing insurance products (which often range from 2.5% to 3.0%), insurers face real and persistent pressure from negative interest spreads. To avoid massive losses and ensure stable operations, they must find assets with sufficient returns.
As returns from traditional fixed-income investments diminish, insurance stocks naturally align with insurers' investment logic. Their low valuations and high dividend yields can provide a safety cushion through both share price and dividends. Furthermore, insurers inherently possess a deep understanding of their peers, and market observers view these purchases as a vote of confidence in the industry's operational prospects.
Secondly, the formal implementation of new accounting standards in 2026, specifically IFRS 9 for financial instruments and IFRS 17 for insurance contracts, is expected to increase profit volatility for insurers due to fair value measurement and the use of spot discount rates. By acquiring significant stakes in peers, insurers can account for them using the equity method for long-term equity investments. This allows valuation changes to flow into the equity section of other comprehensive income, effectively smoothing out profit fluctuations and reducing uncertainty.
Finally, the sustained decline in listed insurers' share prices this year has pushed valuations into what many consider value-investment territory. Major domestic listed insurers' A-shares are generally trading below 1x embedded value, with H-shares in an even lower range of 0.5x to 0.7x, significantly below historical averages and other financial sectors like banking. Insurers' frequent purchases of peer shares reflect both an expectation of a "value return" for the sector and a tangible show of support for the industry's development.
In summary, the current trend of cross-shareholding among listed insurers is essentially a necessary outcome of asset-liability management pressures in a low-interest-rate era. It represents more than simple financial investment; it is a collective recognition of the sector's valuation bottom. Provided compliance and risk isolation are ensured, this capital linkage can help stabilize market expectations.
Future Outlook and Risk Considerations
Looking ahead, it is highly probable that mutual shareholding among insurers will continue. With interest rates expected to remain low for an extended period, high-dividend strategies will become standard for insurance funds, transforming peer holdings from occasional events into regular portfolio components.
Regarding investment preferences, the persistent valuation gap between A-shares and H-shares suggests that Hong Kong-listed assets with low valuations and high dividends will remain a primary target for southbound capital from mainland insurers. This explains the preference for directly purchasing H-shares of peers, as seen with Ping An's consistent buying of China Life and China Pacific Insurance shares in Hong Kong.
However, it is worth noting that this trend of cross-shareholding necessitates vigilance against the potential resonance of systemic risks. If the macroeconomy experiences an unexpected downturn, leading to a simultaneous decline in underwriting profits and investment returns across the industry, the equity linkages between insurers could accelerate the transmission of risks and weaken the overall sector's resilience. Therefore, how to effectively manage risks while allocating capital to peer companies remains a critical issue for insurers to consider. The ongoing situation of insurers increasing their stakes in listed peers will continue to be monitored closely.
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