On December 10, Su Gang, Vice President, Chief Investment Officer, and Chief Financial Officer of China Pacific Insurance (Group) Co., Ltd. (CPIC), stated at the company's 2025 Capital Market Open Day that under current regulatory requirements and industry conditions, each insurance group operates based on its unique asset-liability management system, inevitably resulting in differentiated approaches. "This is normal, as every company should start from its product offerings and liability structure," Su noted.
Su pointed out that based on CPIC's internal asset-liability management model, while considering solvency constraints and annual financial performance stability, the company believes its current equity asset allocation ratio is "appropriate and aligned with long-term management objectives."
He further revealed that by the end of Q3, despite CPIC's equity investment ratio being 1-2 percentage points lower than comparable peers, its comprehensive investment yield remained broadly in line with industry counterparts. "This demonstrates CPIC's ability to achieve competitive investment returns with relatively lower equity exposure."
In his view, equity allocation has become a scarce resource under current regulatory frameworks due to its solvency consumption and exposure to higher volatility and drawdown risks. Therefore, optimizing structure and achieving sustainable balance between assets and liabilities represents an enduring principle insurers must uphold. Su emphasized that equity ratio adjustments depend not only on macro asset performance but also on each company's proprietary ALM framework and quantitative/qualitative judgment criteria.
Regarding macro asset-liability matching strategies, Su identified yield-cost matching and duration matching as paramount. He recalled that during periods of high interest rates and ample fixed-income spreads, yield-cost matching faced relatively lighter pressure. However, with declining rates and rising reinvestment risks, industry sensitivity to duration gaps has intensified significantly. "Extending duration must now become an urgent priority," he remarked.
Su disclosed that CPIC introduced a "net investment yield enhancement" ALM methodology late last year, featuring refined profit source analysis, cost structure breakdowns, and multi-tiered matching across product accounts. However, he acknowledged: "CPIC remains in the exploration phase and hasn't reached an ideal state yet, though consensus has been established."
On duration management, Su stressed that minimizing the duration gap isn't inherently better, nor should absolute zero be the target. Over-pursuing zero gap sacrifices potential for higher risk-adjusted returns. Citing overseas research, he noted that compared with developed market peers, China's insurance industry still has substantial room for improvement in per-customer asset accumulation. Thus, maintaining "a reasonable asset-liability gap" helps create superior long-term risk-adjusted returns.