A recent research report from Shenwan Hongyuan Group Co., Ltd. highlights that the National Financial Regulatory Administration has officially released the "Measures for the Asset-Liability Management of Insurance Companies." The firm anticipates this new regulation will have a profound impact on how insurers allocate their capital. Specifically, the introduction of the net investment income coverage ratio metric is expected to make high-dividend stocks a primary target for increased allocation in secondary equity markets, while also boosting the focus on refined management of sub-accounts. Furthermore, certain stocks, which are heavyweight constituents of the CSI 300 Index, are currently in a state of significant under-allocation, suggesting they possess strong upward potential should market sentiment shift or concerns over capital flows subside.
The key takeaways from Shenwan Hongyuan Group Co., Ltd. are outlined below.
The formal release of the "Measures for the Asset-Liability Management of Insurance Companies" introduces three major adjustments compared to the earlier draft for comment. On August 21, the administration issued the final version, which sets management objectives including term structure matching, cost-income matching, and liquidity matching. It also establishes seven regulatory indicators and ten monitoring indicators. The measures are scheduled to take effect on January 1, 2027, with a three-year transitional period permitted for insurers that do not initially meet the standards. Relative to the draft, the final version makes three primary changes: first, it refines the responsibilities of the board of directors, senior management, and the asset-liability management department; second, it optimizes the requirements for asset-liability management policies and procedures; and third, it adjusts the calculation methods for certain regulatory indicators.
Regarding term structure matching, the new measures offer a phased relaxation of duration matching constraints compared to the draft. The regulatory indicator "duration gap after scale adjustment" (previously set at ±5 years) has been replaced with the "interest rate risk hedging ratio" (set within a 50%-150% range). This shift from an absolute value constraint eases the requirements for insurers with longer liability durations, thereby increasing the flexibility of compliance pathways. Since 2021, listed insurers have proactively optimized their term structures by allocating more long-duration government bonds to extend asset duration and solidify their fixed-income portfolios. It is expected that the implementation of these measures will not significantly alter the long-bond allocation strategies of major insurers going forward.
In terms of cost-income matching, the net investment income coverage ratio constraint positions high-dividend equities as a key area for increased allocation. The measures officially define the core regulatory metrics for interest spread. For life insurance companies, these include: first, the net investment income coverage ratio, which requires net income to cover rigid liability costs, establishing a safety margin for interest spreads under a narrow calculation; and second, the comprehensive investment income coverage ratio, which uses total comprehensive income to cover total liability costs, measuring the company's overall interest spread performance from a business substance perspective. Taking 2025 as an example, the average net investment income coverage ratio for listed companies over the past three years ranges from 103% to 156%, remaining in a relatively safe zone. However, from a medium-term perspective, estimates suggest that the pace of optimizing liability costs will be slower than the impact on net investment returns from new funds and the reinvestment of maturing capital. Consequently, it is anticipated that leading insurers will likely strengthen their dividend income base by increasing allocations to high-dividend stocks in the coming phase.
Liquidity matching focuses on short-term payment capabilities as a core barrier to maintaining operational stability. The regulatory metric is the liquidity coverage ratio under stress scenarios, with a unified mandatory standard of ≥100% for both life and property insurance companies. The calculation rules are aligned with the industry's existing liquidity risk regulatory framework.
Risk warnings include the potential for a downward trend in long-term interest rates, volatility in equity markets, regulatory policy impacts exceeding expectations, and a high frequency of major disasters.