Insurers eye diversified asset allocations

China's five major A-share listed insurers delivered strong earnings growth in the first half of 2026, driven by improved investment returns and higher equity exposure, highlighting the industry's accelerating shift toward more diversified asset allocation amid a low interest rate environment.

China Life Insurance Co Ltd, The People's Insurance Co (Group) of China Ltd, Ping An Insurance (Group) Co of China Ltd, China Pacific Insurance (Group) Co Ltd and New China Life Insurance Co Ltd reported combined net profit attributable to shareholders of 317.39 billion yuan ($47.32 billion), up 78.1 percent year-on-year, according to their interim reports.

Their combined total investment income surged 74.6 percent year-on-year to 641.32 billion yuan, making investment performance the key driver of earnings growth.

Experts said the results reflect not only improved capital market conditions, but also insurers' efforts to strengthen asset-liability management and diversify their investment portfolios. Differences in product structures, investment strategies and risk-management capabilities, however, are likely to drive greater divergence across the industry.

China Life delivered the strongest performance, with first-half net profit more than tripling to 134.49 billion yuan, up 228.6 percent year-on-year. Its total investment income climbed 146.7 percent to 314.5 billion yuan, accounting for nearly half the five insurers' combined investment returns.

China Life attributed the milestone improvement to the company's enhanced asset-liability coordination and its continued efforts to seize long-term investment opportunities. The proportion of stocks and funds in its portfolio rose to 19.14 percent at the end of June from 16.89 percent at the end of 2025, while the value of its stock holdings exceeded 1 trillion yuan for the first time.

The other four insurers also reported higher investment income. The five companies held a combined 21.63 trillion yuan in investment assets at the end of June. Their holdings of stocks and equity funds exceeded 4 trillion yuan, about 490 billion yuan more than at the end of 2025.

The expansion reflects insurers' efforts to improve long-term returns as falling interest rates put pressure on income from bonds and other traditional fixed-income assets. At the same time, greater equity exposure requires stronger risk controls because it can increase short-term earnings volatility.

Insurers have therefore sought to balance relatively stable high-dividend stocks with growth assets offering exposure to technological innovation and industrial upgrading.

Liu Hui, vice-president and board secretary of China Life, said during the group's recent earnings conference that the company's investments in sectors related to new quality productive forces had exceeded 540 billion yuan, achieving an average annual compound growth rate of 30 percent.

Liu added that China Life plans to further increase investment in artificial intelligence, semiconductors, biotechnology, green energy and new infrastructure through direct investment, private equity funds, acquisition funds and other instruments.

PICC will increase investment in AI, advanced manufacturing, green energy, aerospace and biomedicine, among other strategically important sectors, said Cai Zhiwei, the company's vice-president.

The shift is expected to direct more long-term insurance capital toward technological innovation and industrial upgrading, providing financing support for sectors that require long investment periods.

Executives at other insurers also said they would continue increasing equity allocations in the second half, with technology companies and industries associated with new quality productive forces remaining important investment targets.

On the liability side, insurers are also adapting their product mix to the low-interest-rate environment, with participating life policies becoming an important source of new business. Such products combine guaranteed contractual benefits with dividends that vary according to investment and operating performance.

Tian Lihui, a finance professor at Nankai University, said participating policies had gained appeal as returns on bank wealth-management products declined and households became more cautious about volatile equity investments.

The products cater to household demand for relatively stable returns, while the maturity of high-interest bank deposits has also encouraged some savings to move into insurance, Tian said.

Premium growth could moderate in the short term after the peak period for the maturity of high-interest deposits passes and as rules governing insurers' illustrated dividend rates become more standardized, he said. Over the longer term, however, insurance has established a structural role as a pillar of prudent household asset allocation.

The strong listed-insurer results came as the broader industry maintained steady growth. China's insurance sector reported 3.86 trillion yuan in premium income in the first half, up 3.25 percent year-on-year, according to the latest data released by the Insurance Association of China.

Guo Jinlong, director of the Research Center for Insurance and Economic Development at the Chinese Academy of Social Sciences, said the industry is moving beyond extensive, scale-driven expansion and entering a stage characterized by steady overall growth and greater divergence among market participants.

Participating policies are becoming a pillar of new life insurance business, although the recovery in protection-oriented products remains relatively weak, Guo said. Property insurers, meanwhile, are seeing growth in non-motor business but face higher claims risks from extreme weather.

Guo noted that, looking ahead, refined asset-liability management, stronger investment capabilities and technology-enabled operations will become increasingly critical for insurers seeking to navigate market volatility and generate stable long-term returns.