STOCKS | Orient Securities: Long-Term Bonds Remain Core Assets for Insurers

Long-term bonds remain a core allocation on the asset side for insurance funds, with allocation pace jointly determined by absolute yields and term premiums.

According to Jin10, Orient Securities said in an insurance industry research report that insurers’ bond allocation has shifted from simply extending duration to optimizing structure. The report said persistently low interest rates have continued to compress coupon income and reinvestment yields, and that extending duration can only delay a downward shift in the yield center.

The report said that in 2025, net investment yields at major listed insurers generally fell year over year. After existing high-yield assets mature, yields on new allocations gradually flow into interest income. Under a static calculation, allocating to longer-duration assets can reduce the annual reallocation ratio, but cannot fully eliminate the impact of low interest rates.

Orient Securities said yields on 30-year government bonds and local government bonds were still higher than the cost of major new liabilities, meaning long-duration assets still offered coupon coverage and duration-matching value. It added that the 30-year minus 10-year yield spread measures the term premium of ultra-long bonds relative to 10-year government bonds, and that since 2025 the spread has rebounded noticeably from historical lows. The report said insurers’ allocation logic has shifted toward a combination of duration matching, term premium, and timing-based allocation.