Investment Rating - The investment rating for the insurance industry is "Outperform the Market" (maintained) [1][7][28] Core Viewpoints - As of the end of Q2 2025, the balance of insurance funds in China reached 36.2 trillion yuan, a year-on-year increase of 17.4% [2][3] - The insurance sector is increasing its allocation to long-term bonds to optimize asset-liability duration matching amid a backdrop of declining 10-year government bond yields and a scarcity of high-yield assets [9][24] - The stock investment scale for life insurance companies reached 2.7 trillion yuan, an increase of 605.2 billion yuan since the beginning of the year, while property insurance companies' stock investment scale reached 195.5 billion yuan, an increase of 35.4 billion yuan [2][24] Summary by Sections Insurance Fund Utilization - The insurance fund utilization balance reached a historical high of 36.2 trillion yuan, with a year-on-year growth rate of 17.4% [2][3] - Life insurance companies accounted for 90% of the total insurance fund utilization balance, with a year-on-year growth of 17.7% [6] - Property insurance companies had a fund utilization balance of 2.3 trillion yuan, growing 11.3% year-on-year [6] Bond and Equity Investments - The bond allocation for the insurance industry reached 17.9 trillion yuan, accounting for 49.3% of total investment, marking a historical high [11] - Life insurance companies' bond allocation was 16.9 trillion yuan, up 26.6% year-on-year, while property insurance companies' bond allocation was 0.95 trillion yuan, up 19.9% [11][24] - The stock allocation for the insurance sector reached 3.1 trillion yuan, with life insurance companies increasing their stock investments significantly [13][24] Asset Allocation Efficiency - The asset allocation efficiency of insurance funds decreased in Q2 2025, with a fund turnover rate of 35%, the lowest since Q3 2023 [22][24] - The report anticipates that the adjustment of preset interest rates and short-term behaviors will lead to an expansion in the industry's short-term premium scale, which may increase the asset allocation demand of insurance funds [24] Regulatory Changes - Recent regulatory adjustments have simplified the asset allocation standards for insurance funds, allowing companies with strong solvency to increase their equity investment limits [14][15] - The new regulations aim to enhance the investment space for leading insurance companies while maintaining strict controls for those with lower solvency [14][15]