On June 10, China Pacific Insurance (Group) Co., Ltd. (CPIC) held its 2025 Annual General Meeting of Shareholders. Attendees included Chairman Fu Fan, President Zhao Yonggang, Vice President Su Gang, Board Secretary Su Shaojun, and Human Resources Director Wang Mingchao.
Vice President Su Gang addressed questions regarding the investment capabilities of insurance companies. He stated that evaluating an insurer's investment prowess should not focus on short-term market movements but should be based on a long-term market perspective, assessing whether it effectively matches the characteristics of its liabilities. Insurance investment is not merely about buying and selling stocks and bonds; its core principle lies in the multi-faceted matching of the asset side with the duration structure, cost, yield, and cash flow management of the liability side.
Therefore, a company's ability to deliver stable, long-term performance across market cycles and its capacity to control drawdowns during periods of significant market volatility are of paramount importance. CPIC consistently adheres to the principles of value investing, long-term investing, prudent investing, and responsible investing. Starting from our products and with asset-liability matching at the core, we build our strategic asset allocation methodology and foundational models based on liability characteristics, striving to achieve investment returns that consistently exceed liability costs over the long term.
Su Gang pointed out that, on one hand, the company actively increases allocations to long-duration interest rate bonds when rates are relatively high, extending portfolio duration to secure a stable, fundamental stream of net investment income that meets the guaranteed cost requirements of the liability side. On the other hand, while staying within the acceptable limits of solvency stress tests, the company effectively raises the allocation ratio to publicly traded equity assets and alternative assets. This includes optimizing our strategic structure, thereby effectively addressing interest rate challenges and enhancing long-term return levels.
Over the past decade, based on our continuously optimized and refined barbell asset allocation strategy, CPIC's average net investment yield, total investment yield, and comprehensive investment yield have all ranked in the upper-middle tier of the industry, further validating the scientific nature of our strategic asset allocation system and methodology.
Guided by strategic asset allocation, effective tactical asset allocation can enhance returns and smooth volatility by timely capturing market opportunities and continuously diversifying risks. In its publicly traded equity investments, CPIC consistently focuses on a dividend value strategy as its core, actively allocating to high-dividend assets as well as style and growth-oriented assets. This further diversifies our strategy, enhancing the stability of portfolio returns, the resilience of risk management, and the sustainability of performance.
Furthermore, in the area of alternative investments, the company closely follows national strategies, focusing on key sectors such as the big health industry, strategic emerging industries, and new infrastructure. It delves deeply to uncover structural investment opportunities arising from economic transformation, aiming to achieve long-term value growth. Ultimately, building the investment value chain for an insurance company comes down to selecting quality assets. CPIC adheres to the concept of active management. Through in-depth research based on industry chains and related micro-sectors, our investment team can closely track underlying assets across various aspects including profitability, valuation, and corporate governance, fully uncovering diversified investment opportunities to improve the overall return level of the investment portfolio.
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