Guotai Haitong Securities Co., Ltd. has released a research report expressing optimism that both internal and external factors on the asset side will jointly drive improvements in insurance company profitability. Since 2026, long-term interest rates have generally fluctuated within a range of 1.79% to 1.90%. The firm believes that the stabilization and recovery of long-term rates, coupled with expectations for a moderate uptrend in the equity market and insurers' efforts to optimize their asset management and balance allocation/trading strategies, are expected to collectively contribute to enhanced profitability for insurance companies. It maintains an "Overweight" rating on the industry.
Key points from Guotai Haitong Securities Co., Ltd. are as follows: On February 12, the National Financial Regulatory Administration released data on insurance fund utilization for the fourth quarter of 2025. Robust premium growth contributed to a steady increase in total insurance funds utilized by the end of 2025. The total balance of insurance funds utilized reached 38.5 trillion yuan, up 15.7% from the start of the year. This includes 34.7 trillion yuan for life insurance, a 15.7% increase, and 2.4 trillion yuan for property and casualty insurance, an 8.8% increase. This growth is primarily attributed to strong insurance savings demand driving robust premium growth, which provided stable cash flow. In 2025, industry-wide premiums increased 7.1% year-over-year, with life insurance premiums up 8.3% and property and casualty premiums up 3.9%.
Bond allocations remained stable in 2025, while equity allocations saw a notable increase. 1) By the end of the fourth quarter of 2025, the insurance industry had allocated a total of 5.70 trillion yuan to "stocks + funds," an increase of 1.60 trillion yuan from the beginning of the year. This represents 15.4% of total assets, up 2.6 percentage points. Within this, stock assets reached 3.73 trillion yuan, increasing by 1.31 trillion yuan from the start of the year and by 0.11 trillion yuan from the end of Q3. Stocks accounted for 10.1% of assets, up 2.5 percentage points from the year's start and stable compared to Q3. Fund assets totaled 1.97 trillion yuan, up 0.29 trillion yuan from the beginning of the year but down 34 billion yuan from the end of Q3. Funds accounted for 5.3% of assets, a slight increase of 0.1 percentage point from the start of the year but a decrease of 0.2 percentage points from Q3. This increase is partly due to insurance funds responding to guidance for "medium to long-term capital to enter the market," and partly due to benefiting from the recovery in the equity market in 2025, which boosted the value of financial assets. The Shanghai Composite Index rose 18.4% from the start of the year. 2) Bond allocations accounted for 50.4% of the insurance industry's assets, up 0.9 percentage points from the start of the year and 0.1 percentage point from the end of Q3. Bonds are expected to remain the "anchor" of insurers' asset portfolios. In an environment of interest rate fluctuations, insurers are anticipated to flexibly adjust their bond allocation and trading strategies. 3) Bank deposits accounted for 8.2% of assets, down 0.9 percentage points from the start of the year but up 0.3 percentage points from the end of Q3. With deposit rates still at low levels, the proportion of bank deposits is expected to continue its downward trend. 4) Allocations to other assets (primarily non-standard assets) accounted for 18.4%, down 2.7 percentage points from the beginning of the year and stable compared to Q3. This decline is expected to continue as existing non-standard assets mature and a scarcity of new high-quality non-standard assets persists.
Risk warnings include a decline in long-term interest rates, volatility in capital markets, and slower-than-expected improvement in liability costs.
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