Stock market volatility, latest moves of insurance funds exposed!

As Middle East conflicts continue, market volatility intensifies. On March 23, all three major A-share indices declined, with the Shanghai Composite barely holding above 3,800 points at the close. Amid significant market fluctuations, the movement of insurance funds has become a focal point for market attention.

Several insurance investment professionals interviewed by Securities Times stated that the company’s investment strategies will not change due to short-term market adjustments. At the same time, multiple investors are closely monitoring market trends, waiting for suitable opportunities to buy targeted assets.

Not Selling Off Due to Short-Term Fluctuations

A representative from a large insurance asset management company in Shanghai said that the company’s current holdings are stable, and their confidence in China’s economic growth and fundamental outlook remains unchanged. They believe that recent market adjustments are mainly influenced by external factors such as geopolitical conflicts, and the company will not alter its established investment strategy because of this.

An executive from a medium-to-large insurance asset management firm in Beijing stated that the long-term positive trend of the market remains unchanged. Although short-term volatility is high, insurance funds, as long-term capital, are not worried about such fluctuations.

Another investment officer from a large Beijing insurance asset manager also believes that the market adjustment is mainly driven by external influences and is a normal phenomenon. The company has no special operations at present but will keep a close watch. If they judge that the market adjustment is nearing its end, they will consider buying.

“The market is heavily affected by the Iran situation. Without policy or external forces to stabilize the market, there is still room for decline. After the decline, their positions have already been reduced. Next, we will closely monitor the Iran situation, the movements of the ‘national team,’ and market trends, then consider whether to increase equity positions to a central level,” said a mid-sized insurance asset management executive.

Another life insurance company investment head also stated that the company continues to seek undervalued, high-value quality assets and is now closely watching market movements.

Some leaders of small- and medium-sized insurance asset management firms expressed concerns about solvency, noting that they are not surprised by the market decline. Due to external geopolitical influences, surrounding markets are also experiencing significant drops. “Such a decline definitely impacts solvency, whether large or small.”

It is understood that insurance funds follow principles of safety, liquidity, profitability, and asset-liability matching. After fully considering solvency pressures and annual targets, they set ranges for asset allocation ratios and will not easily change them due to short-term market fluctuations.

Several insurance investors told reporters that they would not recklessly increase or decrease positions during short-term market volatility unless there is a fundamental change in the underlying conditions.

Buying Attractive Assets on Dips

“We will increase positions at appropriate times,” said an investment officer from a medium-sized life insurance company. The company’s current equity holdings are relatively low compared to the central level, and the recent market decline has had limited impact. Facing the current market, there is more room, ammunition, and motivation to raise equity investment ratios.

A representative from a large insurance asset management firm also said they are closely monitoring market trends. For targeted assets they are interested in, they might proactively adjust and buy under the premise of balancing risk and safety. “This year, the proportion of equity investments won’t increase dramatically like last year, but the total investment amount won’t decrease compared to last year.”

Another state-owned large insurer said that the company has always taken responsibility and has been increasing positions during dips since last year. This round of market decline is no exception.

A small-to-medium life insurer investment manager told reporters that since 2024, the company’s allocation ratio of equity assets has been steadily rising. According to their previous strategic plan for 2026, there is still some room for growth in equity assets this year.

He explained that due to the rigid requirement for absolute returns, the company recently realized profits on some stocks with significant unrealized gains. They are now closely watching market movements, waiting for suitable opportunities to buy targeted assets.

A senior equity investment manager from a large insurance asset management firm said that although the decline has been significant, they remain optimistic about the domestic market and hope to continue a “slow bull” trend. If there is a turning point in external conflicts, they will prioritize over-sold stocks.

Some insurance professionals also admitted that for insurers with high equity positions, if they face solvency pressures, it will be difficult to increase positions in the short term.

Insurance Funds Still Expected to Contribute Incremental Capital

At the end of February, the China Banking and Insurance Asset Management Association released the 2026 asset allocation outlook survey for insurance institutions, based on feedback from 127 institutions, including 36 insurance asset management firms and 91 insurance companies.

The survey results show that, in terms of major asset allocation, stocks and securities investment funds are the most favored domestic investment assets for insurance institutions in 2026. Most insurers expect their allocations to bank deposits, bonds, securities investment funds, and other financial assets to remain roughly the same as in 2025, with some willing to moderately or slightly increase stock investments.

However, under the downward trend of interest rates, the reliance of insurance funds on stock market performance has increased. Coupled with new accounting standards and policy incentives, the overall scale of equity asset allocation by insurance companies has grown rapidly. In this context, stock market fluctuations are closely linked to insurance capital movements.

Earlier this year, Securities Times conducted the “2026 China Insurance Investment Officer Survey,” where most investment officers believed that the reallocation pressure caused by declining interest rates would drive insurers to increase their equity holdings. Several officers also noted that insurance funds aim for steady investment, and the proportion of equities has already increased significantly. They suggest optimizing the equity investment structure and maintaining a stable overall ratio.

The non-bank financial team at Zhongtai Securities analyzed recent stock and bond market fluctuations and their impact on insurer behavior. Their estimate shows that in 2025, insurance funds’ stock and fund investments increased by nearly 1.6 trillion yuan. Based on index fluctuation assumptions, about two-thirds of this increase came from market value gains, and one-third from active position increases. Under neutral assumptions for 2026, the estimated incremental capital for the year is about 713.3 billion yuan.

Regarding concerns about the behavior of small- and medium-sized insurers, their analysis cited a large life insurer disclosure: a 10% decline in the fair value of equity assets would impact core solvency capacity by about 8.7 percentage points. As of Q4 2025, the average core solvency adequacy ratio for the life insurance industry was around 115% (regulatory minimum is 50%). Objectively, some small- and medium-sized insurers may face certain performance fulfillment pressures. However, considering the introduction of countercyclical adjustments for stock investment risk factors in the second-generation solvency regime, the impulse to chase rising stocks has been reduced.

Dongwu Securities’ non-bank team recently stated that the overall liability-side incremental capital in the insurance industry is large, and insurer capital increases have outpaced reductions. In 2025, the industry’s investment assets increased by 5 trillion yuan. Since 2026, under the “deposit relocation” trend, new insurance premium growth has been impressive, providing ample new capital supply.

Proofreading: Yang Lilin