Core Viewpoint - The insurance industry is adjusting its asset allocation strategies in response to a low interest rate environment, focusing on extending bond durations, credit downgrading, increasing equity allocations, and enhancing alternative assets [1][3][4]. Group 1: Asset Allocation Strategies - The overseas insurance industry has made four major adjustments to asset allocation: extending bond durations, credit downgrading, increasing equity allocations, and enhancing alternative assets [3][4]. - Domestic insurance companies are learning from overseas experiences to develop a diversified asset allocation strategy suitable for the domestic market, including increasing high-dividend assets through FVOCI accounts [1][3]. Group 2: Recent Investment Activities - Since August, insurance capital has frequently acquired shares in financial sector listed companies, with notable transactions including China Ping An's purchases of China Pacific Insurance H-shares [2][6]. - Insurance companies have made over 20 acquisitions of listed companies this year, marking the highest number in five years, primarily targeting high-dividend H-shares in the banking and insurance sectors [6]. Group 3: Financial Performance and Challenges - Insurance companies are striving to maintain high investment returns, with China Ping An achieving a comprehensive investment return rate of 5.8% in 2024, up 2.2 percentage points year-on-year [7]. - The average return rate of non-standard assets held by leading insurance companies has decreased from 6% in 2017 to 4.5% currently, indicating pressure to seek higher returns [8]. Group 4: Market Dynamics and Strategic Considerations - The high dividend yield of H-shares in the banking and insurance sectors, around 4%, is attracting insurance capital, especially in a low interest rate and asset scarcity environment [4][9]. - The narrowing AH share premium has prompted insurance capital to accelerate acquisitions to lock in lower holding costs before further declines [12][13]. Group 5: Risk Management and Asset Liability Matching - Insurance companies are using high-dividend stocks to mitigate risks associated with interest rate differentials and funding mismatches, as the average investment return rate has shifted down to 3%-4% [15][16]. - The phenomenon of "long money short matching" is prevalent, with many leading insurance companies facing a duration gap of 4-7 years, prompting a shift towards high-dividend H-shares as long-term assets [16][18].

Core Viewpoint - Insurance capital has been actively increasing stakes in financial sector listed companies, particularly in H-shares, driven by the need for stable high-yield investments amid low interest rates and asset scarcity [2][5][11]. Group 1: Recent Activities - Since August, insurance capital has frequently made significant purchases in the financial sector, including China Pacific Insurance and Zheshang Bank, triggering mandatory disclosures due to exceeding 5% ownership [2][5]. - In total, insurance capital has initiated over 20 stake increases in listed companies this year, marking the highest frequency in the past five years [5]. Group 2: Investment Strategy - The strategy behind these investments includes utilizing the FVOCI accounting method, which allows insurance companies to smooth out profit fluctuations by classifying high-dividend stocks as financial assets [3][11]. - The current low interest rate environment has prompted insurance companies to adjust their asset allocation strategies, focusing on increasing stock and alternative asset holdings to meet cash flow management needs [3][11]. Group 3: High Dividend Appeal - The banking and insurance H-shares offer attractive dividend yields of approximately 4% to 5%, which exceed the average return of insurance capital, making them appealing for maintaining higher investment returns [7][10]. - The trend of narrowing AH share premium has led insurance capital to expedite their investments in H-shares to lock in lower holding costs before further price increases [9][10]. Group 4: Risk Management - Insurance companies are also using these investments to mitigate risks associated with interest rate spreads and funding mismatches, as the current market conditions have shifted their focus from safety to yield [11][12]. - The long-term asset allocation strategy aims to address the structural mismatch between the long duration of insurance liabilities and the shorter duration of available high-yield assets [12][13].