China Pacific Insurance strengthens asset-liability management amidst economic shifts

China Pacific Insurance Group (CPIC) has established an asset-liability management system designed to navigate economic cycles, focusing on long-term value creation and risk mitigation. The company aims for stable investment returns across macroeconomic cycles through a refined "dumbbell-shaped" allocation strategy, balancing fixed-income, public equity, and alternative assets. CPIC’s equity investment strategy, centered on dividend value, has yielded significant returns, with its core dividend value strategy achieving a cumulative return of 54% and its overall active equity performance annualized at 13.6%.

In fixed income, CPIC has extended its bond portfolio duration to manage reinvestment risk, increasing its long-term government bond allocation from 15.2% in 2018 to 46.2% by Q3 2025. This has narrowed the asset-liability effective duration gap, improving maturity matching. The company also emphasizes diversification through alternative investments, particularly in healthcare and national strategic emerging industries, to enhance long-term returns and mitigate market volatility. CPIC’s private equity fund, focusing on strategic new industries, has a target scale of 300 bn yuan, with a first-phase scale of 100 bn yuan.

CPIC’s commitment to robust ALM is reflected in its strong regulatory evaluations. Both its property and casualty insurance and life insurance subsidiaries consistently achieved first-tier ratings in the regulatory ALM capability assessments for 2023, with the life insurance entity maintaining this rating for three consecutive years. These results underscore CPIC's effective risk management and strategic asset allocation.