Insurance-backed private equity firms can achieve billion-yuan registered capital in one step through strategic internal allocations from their parent insurance groups. Insurance-backed private equity funds are becoming a significant force in the private fund market. According to data from the Private Equity Ranking Network, as of April 30, 2026, the number of private equity firms managing over 10 billion yuan (approximately $1.38 billion) in assets increased to 136, up by 4 from the previous month, setting a new historical record. Among these four new entrants, Sunshine Hengyi (Qingdao) Private Fund Management Co., Ltd. (hereinafter referred to as "Sunshine Hengyi Private Fund") is ultimately controlled by Sunshine Asset Management Co., Ltd. This indicates that the number of insurance-backed private equity firms with assets exceeding 10 billion yuan has expanded to five. The rapid expansion of insurance-backed private equity funds is significant as it provides a replicable institutional channel for medium- to long-term capital to enter the market. If this model is extended to areas such as pension funds and corporate annuities, it could fundamentally alter the investor structure and pricing logic of the market, driving the capital markets to transition from a speculative to an allocative model. Why are insurance-backed private equity firms expanding so rapidly? The continuous release of policy incentives is one of the core drivers behind the accelerated entry of insurance-backed private equity funds into the market. In October 2023, the first pilot program for long-term insurance capital investment, amounting to 50 billion yuan, was launched. For the first time, insurance companies were permitted to invest in establishing private securities investment funds, primarily targeting secondary market stocks for long-term holding. That same month, New China Life Insurance and China Life Insurance each contributed 25 billion yuan to jointly establish the first "insurance-backed" private fund—Honghu Private Securities Investment Fund ("Honghu Phase I"). The fund is managed by Guofeng Xinghua (Beijing) Private Fund Management Co., Ltd. Subsequently, the pilot program expanded rapidly. In 2025, the second and third batches of pilot programs for long-term stock investments by insurance capital were approved. By the end of 2025, the total approved scale across the three batches reached 222 billion yuan. Parallel to the expansion of the pilot program, a series of supporting policies have cleared institutional obstacles for insurance capital to enter the private equity market. On January 22, 2025, six departments, including the Central Financial Commission, jointly issued the "Implementation Plan for Promoting the Entry of Medium- and Long-Term Capital into the Market" (hereinafter referred to as the "Implementation Plan"). The plan proposes "increasing the proportion and stability of commercial insurance capital investments in A-shares" and requires that state-owned insurance companies' operating performance be assessed over a cycle of three years or more. The weight of the return on equity (ROE) assessment for the current year should not exceed 30%, while the weight of indicators for cycles of three to five years should be no less than 60%. On December 5, 2025, the National Financial Regulatory Administration issued the "Notice on Adjusting Risk Factors for Insurance Companies' Related Businesses," which reduced the risk factors for insurance companies' investments in constituent stocks of the CSI 300 Index, the CSI Dividend Low Volatility 100 Index, and stocks listed on the Science and Technology Innovation Board (STAR Market) based on holding periods. A lower risk factor means that an investment occupies less capital space, thereby increasing the capital available to insurance companies for new investments. According to multiple interviewees, compared to direct equity holdings, insurance capital's participation in the secondary market through the establishment of private securities investment funds offers several additional advantages. Under the rigid capital constraints of the "Solvency II Phase II" framework, the reduction in risk factors for equity asset allocation serves as a regulatory incentive. At the same time, the implementation of the new accounting standards (IFRS 9) has increased volatility in profit and loss statements. The flexible structure of private securities funds helps achieve smoother accounting returns. Compared to directly purchasing stocks in the secondary market, insurance companies participating in the market through long-term stock investment pilot funds can enjoy policy benefits such as discounted solvency capital charges and exemptions from equity asset ratio limits. This has become a significant reason for large insurance companies to establish private funds. Beyond policy guidance and encouragement, changes in the market environment have also driven insurance capital to accelerate its deployment in the private equity market. Insurance companies are speeding up their entry into the private equity market as a strategic choice to adapt to the current asset environment and meet the characteristics of their own capital. First, against the backdrop of low interest rates and an "asset shortage," the returns from traditional fixed-income assets are insufficient to cover their liability costs. Private equity is seen as an important tool to enhance returns and bridge the gap. Second, there is an inherent requirement for duration and risk matching. The long-term nature of insurance liabilities naturally aligns with the 5-10 year closed cycles of private equity products, helping to reduce duration mismatch risks. To date, seven insurance companies and insurance asset management companies, including China Pacific Life Insurance and Taikang Life Insurance, have been approved to participate. A total of seven private securities investment funds have completed registration, managing 11 products collectively. Notably, the fundraising logic of insurance-backed private equity funds differs entirely from that of ordinary private equity funds, enabling them to cross the "10 billion yuan" threshold more quickly. The capital for insurance-backed private equity funds is not raised externally but is strategically allocated from within the insurance group, allowing for billion-yuan registered capital to be secured in one step. This enables insurance-backed private equity funds to bypass the scalability threshold from their inception, avoiding the years-long fundraising accumulation period typical of ordinary private equity funds. Take Sunshine Hengyi, which became a 10 billion yuan private equity firm in April, as an example. Established in September of last year, its assets under management were only 2-5 billion yuan as of March this year. Within just one month, its scale surpassed the 10 billion yuan mark. In contrast, other companies that entered the 10 billion yuan private equity tier during the same period were all established over four years ago.
Preference for High-Dividend Sectors, Significant Investment Potential Remains Beyond differences in fundraising methods, insurance-backed private equity funds also exhibit distinct investment preferences compared to other private equity funds. In April 2025, New China Life Insurance mentioned in its announcement regarding the subscription to the "Honghu Phase II" product: "The private fund adheres to a long-term investment philosophy, employing low-frequency trading and long-term holding strategies to achieve stable dividend income." The investment scope was defined as large-cap A+H shares of eligible listed companies within the CSI A500 Index constituents. Target companies should demonstrate good corporate governance, stable operations, relatively stable dividends, and relatively good stock liquidity, aligning with the long-term investment needs of insurance capital. Data from the Private Equity Ranking Network shows that the "Honghu" series products, managed by Guofeng Xinghua (Beijing) Private Fund, which was jointly funded by China Life Insurance and New China Asset Management, appeared among the top ten circulating shareholders of several blue-chip stocks in the first quarter of this year. These include Kweichow Moutai Co.,Ltd. (600519.SH), China Telecom Corporation Limited (601728.SH), Inner Mongolia Yili Industrial Group Co.,Ltd. (600887.SH), Shaanxi Coal Industry Company Limited (601225.SH), and China Shenhua Energy Company Limited (601088.SH). Simultaneously, Taibao Zhiyuan (Shanghai) Private Fund, ultimately controlled by Pacific Asset Management, became a new top ten circulating shareholder in eight stocks during the first quarter of this year, including Zoomlion Heavy Industry Science And Technology Co.,Ltd. (000157.SZ), Anhui Conch Cement Company Limited (600585.SH), and China Coal Energy Company Limited (601898.SH). This preference for high-dividend sectors is not merely risk aversion but a rational equilibrium driven by actuarial logic. High-dividend assets provide cash flows that match the duration of insurance liabilities, low-valuation blue-chip stocks meet the prudent capital occupancy requirements of solvency adequacy ratio regulations, and the liquidity premium of large-cap stocks aligns with the operational reality of large-scale capital inflows and outflows by insurance funds. Their investment direction essentially reflects the application of insurance asset-liability management techniques in the equity domain. As insurance-backed private equity firms grow stronger, the development landscape of the private equity fund market may be impacted. Insurance-backed private equity funds have challenged the long-standing stereotype that "private equity equates to high-frequency trading and high-risk exposure," introducing genuine patient capital and value investment anchors. At the same time, they have accelerated the industry's trend toward consolidation and reshaped the competitive landscape of 10 billion yuan private equity firms with their state-backed backgrounds. He Qilong, Director of the Heiqishi Capital Research Institute, holds a similar view. In the past, some established private equity firms built moats based on their historical performance as first movers. However, with insurance giants now entering the market with substantial capital, industrial resources, and political and policy backing, competition has evolved from purely investment research contests to comprehensive battles of "resource integration + capital empowerment." Looking ahead, insurance capital is likely to continue accelerating its development in the private equity sector. From the perspective of insurance capital utilization, the capital market and equity in unlisted enterprises are the primary investment directions, with stocks and equity-type fund investments accounting for 12% of the total. Insurance companies still have significant potential and room to increase their stock investments. Expanding stock investments is currently a favorable strategy and choice for insurance capital asset allocation. In the future, policies related to insurance capital investments will be further optimized and improved to encourage insurance capital to steadily increase its investment proportion in the stock market. In particular, large state-owned insurance companies should play a leading role, striving to allocate 30% of their annual new premium income to stock investments and aiming to steadily increase the proportion of insurance capital invested in the stock market from the current level. These "two strivings" will fully leverage the positive role of insurance capital as institutional investors in long-term and value investing.
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