Huachuang Securities: There is still some room in the upper limit for insurance capital equity allocation; potential dividend allocation demand is around 600 billion yuan.

Huachuang Securities released a research report stating that as of 2026H1, insurance capital's fund utilization balance reached 40.8 trillion yuan, with combined allocation to stocks and funds at 16.2%, a record high; including long-term equity investments, the overall equity proportion reached 23.8%, still leaving some room relative to the 30% equity allocation cap, while high-dividend names accounted for 74%, at a historical high. Listed insurers generally increased equity allocations, while bond allocations showed five up, one flat, and two down. On August 21, 2026, the National Financial Regulatory Administration issued the "Measures for the Asset-Liability Management of Insurance Companies," effective from January 1, 2027, establishing regulatory indicators such as the interest rate risk hedging ratio, comprehensive investment return coverage ratio, net investment return coverage ratio, and liquidity coverage ratio. Listed insurers basically meet the standards, while tail-end non-listed insurers face relatively obvious pressure. The bank estimates that insurance capital premium inflows in 2026-2027 will be approximately 6.2/6.4 trillion yuan, corresponding to incremental market entry funds of approximately 740/760 billion yuan (neutral case), with potential dividend allocation demand on the order of approximately 600 billion yuan. The main views of Huachuang Securities are as follows: 2026H1 insurance capital allocation industry situation: equity positions break through historical highs As of 2026H1, insurance capital's fund utilization balance reached 40.8 trillion yuan, with combined allocation to stocks and funds at 16.2%, a record high; including long-term equity investments, the overall equity proportion reached 23.8%, still leaving some room relative to the 30% equity allocation cap. On the funding side, premium growth continued to converge, is expected to bottom out and rebound from September to December, with full-year premium inflows estimated at approximately 6.2 trillion yuan. As of 2026Q2, the top five industries for insurance capital's heavily held tradable shares were banks, utilities, home appliances, electronics, and transportation, with banks maintaining a long-term proportion of approximately 40%-60%. Among them, high-dividend names accounted for 74%, at a historical high, and Q2 is expected to have focused on adding positions in utilities, steel, banks, and other sectors. Listed insurers: generally increased equity allocations, with divergent stock styles In 2026H1, the core equity rankings of listed insurers were New China Life 25.6%, Ping An 19.4%, China Life 19.2%, China Taiping 18.1%, P&C 18.0%, PICC 15.4%, CPIC 13.9%, and Sunshine 13.1%, generally up from the end of the prior year; bond allocations showed five up, one flat, and two down, while the proportion of non-standard assets continued to decline. Equity allocation was mainly direct stock investment, with the FVOCI proportion among stocks showing five up and three down. Judging allocation style from accounting classification, China Life and New China Life are expected to be flexible and aggressive, CPIC, China Taiping, and PICC relatively balanced, and P&C, Sunshine, and Ping An relatively prudent. New asset-liability rules: establishing long-term constraints on insurers' asset-liability matching On August 21, 2026, the National Financial Regulatory Administration issued the "Measures for the Asset-Liability Management of Insurance Companies" (new asset-liability rules), effective from January 1, 2027; companies failing to meet the indicators may apply for a 3-year transition period. The measures specify three major objectivesterm structure matching, cost-benefit matching, and liquidity matchingand four principles: comprehensive coverage, reasonable matching, prudence and robustness, and overall coordination. The core approach is to establish regulatory indicators and monitoring indicators: regulatory indicators for life insurers include the interest rate risk hedging ratio, comprehensive investment return coverage ratio, net investment return coverage ratio, and liquidity coverage ratio, while monitoring indicators include the effective duration gap, basis point value change rate, and spread tier 3/4, etc.; regulatory indicators for P&C insurers are the deposited funds coverage ratio, income coverage ratio, and liquidity coverage ratio, while monitoring indicators include spread tier 1/2 and spreads under stress scenarios. Analysis of indicators related to the new asset-liability rules: tail-end insurers face pressure on regulatory indicators and need joint efforts on both asset and liability sides to close gaps Under the new asset-liability rules, the most obvious pressure on regulatory indicators is for life insurers, whose net investment/comprehensive investment return coverage ratios may face significant challenges. Listed insurers basically meet the regulatory indicators under the new asset-liability rules, while tail-end non-listed insurers face relatively obvious pressure. Based on data from 70 non-listed life insurers, approximately 9% have a five-year average comprehensive investment return below 4%; insurers failing to meet the standards need joint efforts on both asset and liability sides: on the asset side, seize timing to allocate long bonds at highs to shorten the duration gap, and allocate high-dividend assets to solidify the net investment return ratio, etc.; on the liability side, balance new business growth and cost control, control liability duration from lengthening significantly, and promote the transformation to participating products to reduce rigid cost pressure on existing business. Estimates From a flow perspective, insurance capital premium inflows in 2026-2027 are expected to be approximately 6.2/6.4 trillion yuan, with new investable funds of approximately 3.75/3.86 trillion yuan, corresponding to incremental market entry funds of approximately 740/760 billion yuan (neutral case); considering market value fluctuations, the equity position increase in 2026 under the neutral scenario is estimated at approximately 1 trillion yuan. Regarding potential dividend demand, assuming 20% of tail-end insurers and insurers with relatively aggressive strategies fail to meet the net investment return coverage ratio, a high-dividend portfolio would be needed to close a 0.6% return gap, corresponding to dividend allocation demand on the order of approximately 600 billion yuan. From the perspective of FVOCI allocation pace, insurance capital (excluding Ping An) is expected to add 140+ billion yuan in new FVOCI stock allocations in 2026H2, with Ping An contributing an additional 50+ billion yuan per year in conjunction with premium inflows. Risk warnings: model assumption errors, model estimation errors, equity market volatility, rapid decline in long-end interest rates, premium growth falling short of expectations.