As listed companies' interim reports are released, the investment performance and partial holdings of insurance capital "long money" have surfaced. It was noted that New China Life Insurance's interim report disclosed partial operating conditions of the Honghu Fund. As of the end of Q2 2025, Honghu Zhiyuan (Shanghai) Private Investment Fund Co., Ltd. (hereinafter referred to as "Honghu Fund Phase I") had total assets of 57.112 billion yuan and net assets of 55.684 billion yuan, with comprehensive income totaling 5.684 billion yuan. As of early March 2025, all 50 billion yuan of Honghu Fund Phase I had been fully invested and deployed, currently ranking among the top ten circulating shareholders of Yili Group (600887.SH), Shaanxi Coal Industry (601225.SH), and China Telecom (601728.SH), with combined market value holdings of 12.04 billion yuan in these three companies at the end of Q2.

Additionally, Guofeng Xinghua Honghu Zhiyuan Phase II Private Securities Investment Fund (hereinafter referred to as "Honghu Fund Phase II") also newly entered the top ten shareholder lists of Petrochina Company Limited (601857.SH) and China Shenhua Energy Company Limited (601088.SH) in the first half of the year, while Guofeng Xinghua Honghu Zhiyuan Phase III Private Securities Investment Fund No. 1 (hereinafter referred to as "Honghu Fund Phase III No. 1") also acquired stakes in China Petroleum & Chemical Corporation (600028.SH) in July this year.

Regarding the positioning logic behind this, New China Life Insurance stated that Honghu Fund Phase II adheres to long-term investment principles, obtaining steady dividend income through low-frequency trading and long-term holding. Phase III fund investment scope focuses on large listed companies' A+H shares among CSI A500 Index constituents that meet the criteria.

"As the proportion of long-term capital entering the market increases, insurance-backed private equity will become one of the private institutions with the largest A-share holdings in the industry," industry insiders said. Insurance-backed private equity needs to pay dividend taxes but can enjoy additional risk factor discounts, reducing capital occupation and solvency consumption. Private equity is gradually becoming an important channel for insurance capital position building.

**Honghu Fund Phase I Report Card Unveiled: Achieving Comprehensive Income of 5.684 Billion Yuan, Increasing Positions in Yili Group and Shaanxi Coal Industry in First Half**

To cultivate insurance funds as patient capital and address the "long money, short allocation" problem of insurance companies, in March 2024, China Life Insurance and New China Life Insurance jointly established Honghu Fund Phase I with a total scale of 50 billion yuan, which officially launched. According to relevant officials from asset companies under China Life Group, as of early March 2025, all 50 billion yuan of Honghu Fund Phase I had been fully invested and deployed, achieving excellent performance with risks below benchmark and returns above benchmark.

It was noted that New China Life Insurance's recently released interim report disclosed partial operating conditions of Honghu Fund Phase I. As of June 30, 2025, Honghu Zhiyuan had total assets of 57.112 billion yuan and net assets of 55.684 billion yuan, with comprehensive income totaling 5.684 billion yuan. As a significant joint venture, New China Life Insurance uses the equity method for accounting, holding a 50% stake and enjoying a net asset share of 27.842 billion yuan in Honghu Fund. The fund's current operating income was 1.203 billion yuan, with net profit reaching 968 million yuan.

"Honghu Fund Phase I transferred asset appreciation of 5.684 billion yuan, but there are still considerable unrealized gains on assets not fully realized on the books, so the actual profit situation is higher," relevant personnel from New China Assets told the reporter.

In terms of holdings, Honghu Fund Phase I currently ranks among the top ten circulating shareholders of Yili Group, Shaanxi Coal Industry, and China Telecom. Specifically, Honghu Fund Phase I increased positions in both Yili Group and Shaanxi Coal Industry in the first half. As of the end of Q2, Honghu Fund Phase I held 153 million shares of Yili Group, with shareholding ratio rising from the initial 1.88% to 2.42%, ranking 7th among Yili Group's top ten shareholders; held 116 million shares of Shaanxi Coal Industry, with shareholding ratio rising from initial 1.04% to 1.2%, making it Shaanxi Coal Industry's fifth-largest shareholder. As of the end of Q2, it held 762 million shares of China Telecom, accounting for 0.83% of the company's total share capital.

"From the perspective of target attributes, Yili Group, Shaanxi Coal Industry, and China Telecom all possess strong medium-to-long-term profitability and stable dividend levels, meeting insurance capital's value investment and long-term investment needs," said Qiu Jian, Chief Insurance Researcher at China United Property Insurance Group Research Institute.

Wind data shows that over the past 10 years, the average dividend yields of Yili Group, Shaanxi Coal Industry, and China Telecom were 2.69%, 5.03%, and 4.84%, respectively.

In Qiu Jian's view, as interest rate centers decline and non-standard assets mature, high-dividend stocks have certain substitution capabilities for related assets. He expects insurance companies will further increase holdings of assets with steady dividends, high capital appreciation, and high ROE attributes to match the long-term stable demands of the insurance industry's asset side.

**Honghu Fund Continuously Increases Dividend Stock Allocation: Phase II Newly Positions in Petrochina Company Limited and China Shenhua Energy Company Limited, Phase III Stakes in China Petroleum & Chemical Corporation**

While Honghu Fund Phase I's 50 billion yuan investment is being deployed, Honghu Fund Phase II and III are entering the market at an intense pace.

"As of mid-year, Honghu Fund Phase I has completed its positioning task and achieved good returns. By the end of Q2, Phase II had completed major positioning and basically finished positioning work. Phase III started from early July, and progress is currently very smooth," revealed Chen Yijiang, President of New China Assets, at New China Life Insurance's interim results conference recently.

It was noted that in interim reports recently disclosed by listed companies, Honghu Fund Phase II appeared in the top ten shareholder lists of Petrochina Company Limited and China Shenhua Energy Company Limited. As of the end of Q2, Honghu Phase II Fund held 217 million shares of Petrochina Company Limited, accounting for 0.12% of the company's total share capital, ranking 7th among Petrochina Company Limited's top ten shareholders. Additionally, Honghu Phase II Fund also newly became China Shenhua Energy Company Limited's tenth-largest circulating shareholder in Q2, holding 52.206131 million shares, accounting for 0.26% of circulating A shares.

Furthermore, China Petroleum & Chemical Corporation recently announced that Honghu Fund Phase III No. 1 holds 305 million shares, accounting for 0.25% of China Petroleum & Chemical Corporation's total share capital, ranking 7th among the top ten shareholders.

Regarding the positioning logic behind this, New China Life Insurance stated that Honghu Fund Phase II adheres to long-term investment principles, obtaining steady dividend income through low-frequency trading and long-term holding. The company will treat Honghu Zhiyuan Phase II as a joint venture using the equity method for accounting.

Multiple industry insiders believe that the essence of the above holdings is insurance companies' value discovery of "high dividend + strong cash flow" assets. The resource scarcity advantages and high dividend characteristics of energy sector leading stocks are the core logic of insurance capital allocation.

A Chief Risk Officer from a leading insurance asset management company explained: "Over the past 10 years, high-dividend assets represented by dividend indices have shown significant capital expenditure declines. After the capital expenditure peak in 2012-2013, compared to small and medium growth companies, high-dividend companies represented by China Shenhua Energy Company Limited are currently in a low-input, high-output phase, which means steady returns for insurance capital."

Taking China Shenhua Energy Company Limited as an example, from 2007-2015, net cash flow generated was 511.4 billion yuan, with capital expenditure of 348.1 billion yuan, meaning 68% of earnings had to be allocated for capital expenditure. During 2007-2015, China Shenhua Energy Company Limited had an 8-year return rate of -16% (dividends + stock price growth), while the overall A-share return rate was 281% during the same period. From 2015-2022, the 8-year return rate was 140%, while the overall A-share return rate was 13% during the same period. From 2016-2022, net cash was 614 billion yuan, with cumulative capital expenditure of 162.5 billion yuan, about 26% of income allocated for capital expenditure, leaving 74% as cash on hand. In 2023-2024, China Shenhua Energy Company Limited's dividend ratios were 75.2% and 76.5%, respectively. As of September 1 closing, its A-share dividend yield was 8.6%.

**Insurance Capital "Private Equity" Becomes Important Position-Building Channel for Insurance Companies, Dividend Assets' "Safety Cushion" Attributes Highlighted**

Currently, the long-term equity investment pilot has expanded from Honghu Fund Phase I's 50 billion yuan to 222 billion yuan, with insurance-backed private securities investment funds becoming an important position-building channel for insurance companies.

Looking ahead, multiple chief strategists from securities firms generally believe that as the proportion of long-term capital entering the market increases, the A-share market is expected to emerge from a more sustainable slow bull pattern.

According to statistics, as a pilot benchmark, Honghu Fund Phases 1-3 have reached a scale of 92.5 billion yuan, just one step away from the trillion yuan target. Currently, the 222 billion yuan fund approved under the long-term investment reform pilot has successively established corresponding private equity operations.

A person from the equity investment department of an insurance asset management company stated: "Insurance-backed private equity needs to pay dividend taxes but can enjoy additional risk factor discounts, reducing capital occupation and solvency consumption. Combined with long-cycle assessment policy support, this may drive insurance capital to increase allocation of dividend assets with strong safety cushion attributes."