<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/O9Kyl5-GhweAhfRjN87l5OmFYJo6EFrjgoVpG_UXscKQQAA/1000?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/O9Kyl5-GhweAhfRjN87l5OmFYJo6EFrjgoVpG_UXscKQQAA/1000"/>
The A-share market has recently experienced a pullback, with rumors suggesting that the main reason is that small and medium-sized insurance companies are reducing their positions due to new solvency regulations. In response, several investment heads from insurance companies denied this claim to Yicai.
&#34;Insurance capital is definitely not the main reason for the market decline,&#34; said Sun Ting, Chief Strategist and Chief Analyst of Non-Bank Financials at Soochow Securities.
Many analysts expressed similar views. They generally believe that there are currently no new solvency regulations. Some small and medium-sized insurance companies may indeed be reducing their positions due to solvency or performance pressure, but their overall share in the insurance capital is very low, and large insurance companies do not face significant reduction pressure, thus having a limited impact on the market. In fact, the overall trend for insurance capital this year remains focused on increasing positions.
Limited impact, definitely not the main reason
Choice data shows that the SSE Index has fallen more than 8% from early March to the 23rd.
Several investment heads from insurance companies denied that &#34;the main reason for the decline is the reduction of positions by small and medium-sized insurance capital due to solvency regulations,&#34; stating that &#34;this claim is not quite right&#34; and &#34;should not be the case.&#34; Many industry analysts indicated that, from both the perspective of solvency policies and the capital share of small and medium-sized insurance companies, this rumor is &#34;not credible.&#34; Even if some small and medium-sized insurance companies do reduce their positions due to solvency pressure, it will not become the main reason for the market decline.
From the perspective of solvency policies, Ge Yuxiang, Chief Analyst of Non-Bank Financials at Zhongtai Securities, told Yicai that the transition period for the second generation of solvency regulations will be extended to the end of 2025, and there are no new regulations fully implemented in 2026. The draft for the third phase of the second generation of solvency regulations is currently being tested internally by regulators, and the overall direction is towards relaxation.
Sun Ting also stated that the rumored new solvency regulations have not yet been implemented. &#34;The previously executed transition period policy for the second phase of the second generation of solvency regulations is expected to end, but the third phase policy based on the new accounting standards is still in the testing stage, has not been implemented, and will not affect the behavior of insurance capital.&#34;
So, will the end of the transition period for the second phase of solvency regulations have an impact? Some industry analysts indicated that although the assessment period is approaching the end of the quarter, this is not the &#34;first implementation&#34; of new solvency regulations, but rather a continuation of normalized regulatory requirements. Therefore, the marginal impact of the second phase of solvency regulations on this market adjustment is limited.
From the perspective of the scale of insurance funds, Sun Ting stated that the insurance industry is highly concentrated, with leading large companies holding most of the industry’s investment assets, and their operations and investment behaviors are stable.
&#34;Currently, there are indeed some small and medium-sized companies that are reducing their positions due to solvency pressure, but this is a normal situation in the industry, and their share in the overall capital is very low, making it difficult to have a significant impact on the stock market,&#34; Sun Ting said.
Ge Yuxiang analyzed that, objectively speaking, some small and medium-sized insurance companies may face certain performance pressure, but considering that the second generation of solvency regulations has introduced counter-cyclical adjustments for stock investment risk factors, it has reduced the impulse for insurance companies to &#34;chase highs and sell lows.&#34; &#34;We believe that for medium and large insurance companies, which account for over 70% of the capital and will implement new standards by the end of 2025, the actual reduction pressure is not significant
Another analyst also stated that insurance capital is just one of the market participants and should not overly exaggerate the impact of insurance capital's reduction on the overall market trend. From the perspective of core market drivers, the macro-level uncertainty caused by overseas geopolitical conflicts is the fundamental reason for the consistent behavior of funds.
Overall solvency situation of the industry is still good
The solvency of insurance companies refers to their ability to fulfill insurance obligations, pay claims, and make due payments, that is, the ability of insurance companies to fulfill their commitments to policyholders.
According to the team led by Sun Ting, in 2003, the former China Insurance Regulatory Commission referenced European Solvency I and American RBC regulatory standards to initially establish a management system for the solvency limits and regulatory indicators of insurance companies, which has since been continuously developed and improved.
Sun Ting stated that the domestic insurance industry has experienced a transition from the &#34;scale-oriented&#34; Solvency I to the &#34;risk-oriented&#34; Solvency II system. The first phase of Solvency II was fully implemented in 2016, and the second phase was officially implemented in 2022, while there is currently no specific timetable for the third phase. The first phase achieved a shift from &#34;scale-oriented&#34; to &#34;risk-oriented,&#34; while the goal of the second phase is to strengthen risk penetration regulation. The core directions of the third phase are expected to include alignment with new accounting standards and further optimization of capital measurement.
If solvency standards are not met, insurance companies will face varying degrees of regulatory measures. For example, restrictions on dividend payments to shareholders, orders to increase capital, orders to stop part or all new business, and restrictions on investment forms or proportions, etc.
In terms of investment, the upper limit of equity asset allocation ratio for insurance companies is linked to the level of solvency. The higher the comprehensive solvency adequacy ratio, the higher the upper limit of equity allocation ratio. Conversely, if solvency declines, it may lead to forced reduction in positions. According to the notice issued by the National Financial Regulatory Administration in April 2025 regarding the adjustment of regulatory ratios for equity assets of insurance funds, the proportion of the book balance of equity assets to total assets at the end of the previous quarter can be as low as 10% and as high as 50%, depending on the level of comprehensive solvency adequacy ratio.
From another perspective, equity asset allocation also consumes risk capital, and the degree of consumption is positively correlated with the level of risk factors, thereby affecting the comprehensive solvency adequacy ratio. To further guide insurance capital into the market, at the end of last year, the notice issued by the Financial Regulatory Administration regarding the adjustment of risk factors for relevant business of insurance companies lowered the risk factors for investing in certain stocks, thereby reducing the risk capital occupation of equity assets for insurance companies.
It is undeniable that after the implementation of the second phase of &#34;Solvency II,&#34; the solvency adequacy ratio of insurance companies generally declined due to stricter standards for actual capital and minimum capital recognition. Although insurance companies have subsequently supplemented capital through methods such as capital injection and bond issuance, leading to a gradual stabilization of the solvency adequacy ratio, since 2025, changes such as the increase in equity holdings of insurance companies have led to a decline in solvency again.
Ge Yuxiang stated that the current financial data used to calculate solvency under &#34;Solvency II&#34; still follows the old standards. The discount rate measurement for liability reserves is based on the 750-day moving average of the government bond yield curve. The pressure on solvency in 2026 mainly comes from the downward shift of the denominator assessment curve (which is expected to decline by 33.8, 30.8, and 15.4 basis points in 2025, 2026, and 2027, respectively)
Ninety percent of the investment assets in the insurance industry are from life insurance funds, so the solvency of life insurance companies has a significant impact on the direction of insurance funds. According to data from the National Financial Regulatory Administration, by the end of 2025, the core solvency adequacy ratio and the comprehensive solvency adequacy ratio of personal insurance companies are expected to be 169.3% and 115%, respectively, down 21.2 and 8.8 percentage points from the end of 2024, but still significantly above the regulatory requirement (the core solvency adequacy ratio should not be less than 50% or the comprehensive solvency adequacy ratio should not be less than 100%).
How significant is the overall impact of market declines on the industry's solvency? Ge Yuxiang stated that according to disclosures from Ping An Life, a 10% drop in the fair value of equity assets would impact the core solvency by approximately 8.7 percentage points. In this regard, based on last year's average core solvency adequacy ratio of 115% for the life insurance industry, the overall impact on the industry's solvency is still far from the regulatory red line.
Sun Ting noted that listed insurance companies are generally larger in scale, operate steadily, have stronger capital strength, and possess greater ability to supplement capital through endogenous or exogenous means, making the probability of severe solvency pressure in the short term very low. As for the situation of non-listed insurance companies, as of March 21, among 75 non-listed insurance companies, 18 had not disclosed their solvency information for the fourth quarter of last year. Among the 57 that have disclosed, only Huahui Life has a risk comprehensive rating of C, and Changsheng Life has a comprehensive solvency adequacy ratio below 100%, making them non-compliant companies; the remaining companies are all compliant. Among the 57 companies, 77% have a core solvency adequacy ratio exceeding 100%, and 78% have a comprehensive solvency adequacy ratio exceeding 150%, indicating a generally good situation.
Increasing positions outweighs decreasing positions
In fact, from last year's asset allocation of insurance funds, the equity allocation of 38 trillion yuan reached a new high. Data from the National Financial Regulatory Administration shows that the allocation of core equity assets (stocks + securities investment funds) by insurance funds has significantly increased by 1.6 trillion yuan since the beginning of the year, reaching 5.7 trillion yuan.
Industry analysts generally believe that the &#34;main theme&#34; for insurance funds in equity assets this year remains increasing positions rather than decreasing positions.
&#34;We expect the scale of increasing positions by insurance funds to outweigh decreasing positions,&#34; Sun Ting analyzed, stating that the insurance industry's investment assets are expected to increase by over 5 trillion yuan in 2025, and since 2026, against the backdrop of &#34;deposit migration,&#34; the growth rate of new insurance premium income has been impressive, resulting in a substantial new supply of capital.
The non-bank team of Guotai Junan stated that equity asset returns are currently an important source of investment income for insurance companies. From the perspective of the entire year of 2026, insurance companies will continue to increase their allocation of equity assets.
Ge Yuxiang mentioned that at the beginning of last year, regulators guided large state-owned insurance companies to invest 30% of their newly added premiums each year into A-shares. According to his calculations, by 2025, the cumulative increase in insurance funds in stock funds will be nearly 1.6 trillion yuan. Based on index fluctuations, it is estimated that about two-thirds of this contribution comes from market value fluctuations, and one-third comes from active position increases. Under neutral assumptions, the estimated incremental funds for the entire year of 2026 will be approximately 713.3 billion yuan
(This article is from Yicai Global)

科创综指

000905

000016

The A-shares have recently pulled back, and market rumors suggest that small and medium-sized insurance companies are reducing their holdings due to new solvency regulations. Several investment heads and analysts from insurance companies have denied this, believing that overall, insurance capital is still focused on increasing positions, and the reduction in holdings by small and medium-sized insurance companies has a limited impact on the market. Analysis indicates that the new solvency regulations have not yet been implemented, and even if some small and medium-sized insurance companies reduce their holdings, it will not be the main reason for the market decline. Overall, the insurance industry has a high concentration, with leading companies holding most of the investment assets and operating steadily

腾讯新闻 - 财经

CSI 500

SSE 50

Huatai-PB CSI 300 ETF

China Southern CSI 500 ETF

SSE Index

Shenzhen Index

CAM CSI300

ChiNext

Fortune SG SSE 180 Value ETF

ISHARESCSI300

CAM CSI300-R

ChinaAMC China 50 ETF

CSI 300

The reduction of positions by small and medium-sized insurance funds leads to a pullback in A-shares? Industry insiders say the impact is limited, with an overall trend of increasing positions