Dialogue with China Pacific Insurance Vice President Su Gang: Increase efforts in exploring innovative high-quality assets such as ABS and REITs, looking forward to expanding QDII quotas to explore global allocation opportunities.

Caixin News, May 11 (Reporter Li Ting) The much-anticipated insurance funds—every move and decision is at the center of market attention. Judging from the first-quarter 2026 trends in insurance funds, according to incomplete statistics, by the end of the first quarter, insurance funds had appeared among the top ten circulating shareholders of nearly 650 A-shares. Increasing holdings of equity interests remains the general direction.

However, it is impossible to ignore that the downward shift in the interest-rate center, the shrinking supply of high-quality assets, and the way the new accounting standards amplify performance fluctuations are becoming the “threefold pressures” hanging over the insurance industry—further increasing the difficulty of investing insurance funds.

As a representative of long-term capital and liability-based funds, insurance fund investments are a “marathon,” and even more so a “relay race” based on asset-liability matching. How should we view the pressure of moderately increasing allocations to equity assets alongside short-term performance fluctuations? How can we balance term-structure matching and cost-benefit matching in a low-interest-rate environment? How do we seize risks and opportunities in tracks such as energy transition and technological innovation? With these questions in mind, Caixin News recently interviewed Su Gang, Vice President and Chief Financial Officer of China Taiping Insurance (Group) Co., Ltd.

Caixin News: How do you view the impact of equity market volatility since Q4 2025 on performance?

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Su Gang: Equity investments are characterized by high volatility; over the next one to two years, we will place great emphasis on drawdown risk management.

Judging from the latest disclosed performance reports of insurance companies, under the new accounting standards, both the insurance companies’ performance and short-term fluctuations have clearly increased.

“New accounting standards, centered on fair value measurement, require assets to reflect market fluctuations in a timely manner. This does not fully match the long-term and stable operating characteristics of life insurance liabilities, creating additional pressure on financial statements and operational management,” Su Gang said. “How to seek a balance between long-term operating growth and short-term financial performance within the existing rules framework is a common challenge for the insurance industry at present.”

But in the current economic environment, a common measure in insurance companies’ asset allocation in recent years is increasing allocations to equity assets. Su Gang also believes that in a low-interest-rate environment, the decisive factor in improving the investment returns of insurance funds lies in equity investments. However, equity investments naturally have high-volatility characteristics. How can insurance institutions moderately increase equity allocations while smoothing the impact on performance fluctuations? This raises higher requirements for insurers’ tactical allocation capabilities.

In Su Gang’s view, further improving equity investment capability should focus on two areas: first, placing emphasis on digging out structural opportunities; second, giving high priority to drawdown risk management.

“From 2024 to 2025, A-shares have risen for two consecutive natural calendar years. At this point, A-shares have completed the valuation repair process, and earnings have become the core variable driving the market,” Su Gang said. “Against this background, it is especially critical to go deep into industry chains, conduct more detailed research into more segmented sectors, and uncover structural opportunities. Continuously discovering new investment areas and investment targets—being able to identify the long-term allocation value of assets one step ahead of others, or at least slightly earlier—is a continuous challenge, but also something that must be kept doing.”

Choosing the right investment targets is undoubtedly important, but during the conversation, Su Gang repeatedly discussed drawdown risk management. He believes that with PPI bottoming out and rebounding, and expectations for an improvement in China’s nominal growth rate being reinforced, the market has already priced in the prospect of earnings recovery to a certain extent. If the subsequent pace of corporate earnings recovery falls below market expectations, asset valuation may face stage-by-stage adjustment pressure. At the same time, under a backdrop of de-globalization, overseas geopolitical risks can also disrupt domestic market risk appetite. “In the next one to two years, we need to pay heightened attention to drawdown risk management to reduce the loss to long-term investment returns caused by market volatility.”

Caixin News: How should we respond to volatility? Will you adjust positions because of short-term fluctuations?

Su Gang: Leave reasonable “redundancy” to cope with uncertainties and enhance the space for investment flexibility; stay with conviction—China Taiping’s equity investment turnover rate is only 1/5 of that of public funds.

“I think the biggest fear in making investments is falling into a self-reinforcing illusion,” Su Gang said. “Markets have their own operating rules. We must have respect for uncertainty about the future and for the unknown. We must definitely leave some redundancy—whether from the perspective of resource input or from the perspective of position-setting—to ensure that there is reasonable redundancy. This redundancy enables insurance funds to better and more flexibly respond to market volatility that exceeds expectations, providing room for resilience.”

Su Gang believes that the closer you look at investments and the tighter you follow, the more likely you are to sacrifice strategic redundancy. Overemphasizing short-term high returns can lead to ignoring the need to leave sufficient redundancy for uncertain market changes.

“Once a long-term strategic allocation plan has been formed, we won’t easily make unnecessary large adjustments,” he said. In his view, a reasonable strategic allocation has already formed a good match with the liability characteristics of insurance institutions. “We should not lightly doubt it, nor should we amplify the risk we take just because we suddenly want to raise long-term interest-spread returns.”

Under volatility, rather than making rapid decisions, it is better to remain prudent, dig into market opportunities, and make more precise judgments. Su Gang emphasized that this may require time and better grasp of the overall market rhythm, rather than rushing to adjust positions within a short period.

Su Gang’s prudence also reflects China Taiping’s consistent conservative investment style. As he described, the turnover rate of China Taiping’s equity investments is about 1/5 of that of public funds. “The turnover rate of some accounts is even lower. What does that indicate? Insurance fund investments are made after careful consideration. In the areas and with the targets they believe in, insurance funds are willing to hold them long term and wait for the investment targets’ value to gradually materialize over a long period. Insurance funds do not pursue short-term market volatility.”

Caixin News: How do you assess the current asset-liability duration gap? Is the pressure on reinvestment at maturity high?

Su Gang: Manage by sub-accounts—the asset-liability duration gap aligns with the expected targets; increase efforts to explore innovative high-quality assets such as ABS and REITs.

Insurance funds, especially life insurance funds, have characteristics of long duration and rigid cost. Their funding attributes naturally constrain investment management, and because insurance funds have liability attributes, they have long faced a situation of insufficient supply of high-quality, long-duration assets.

“The rigidity and lag of insurance liability costs will make the allocation pressure for fixed-income-type assets a long-term challenge,” Su Gang said. In a falling interest-rate environment, as high-quality, high-yield assets mature, the reinvestment allocation yield faces a stepwise decline. “But currently, China Taiping’s asset-liability duration gap is in a reasonable position and meets expected targets.”

Su Gang also shared China Taiping’s experience in managing asset-liability term-structure structures. China Taiping, based on a multi-dimensional comprehensive assessment of factors such as liability characteristics, reinvestment risk, financial requirements, and solvency constraints, formulates differentiated asset-liability term-structure management strategies for different accounts. For traditional insurance accounts, the focus is on managing the modified duration gap—the key management approach is to seize opportunities from interest-rate fluctuations: when interest rates are relatively high, extend asset duration and shorten the duration gap when needed. For participating insurance accounts, maintain focus on the effective duration gap. For universal life insurance, more emphasis is placed on balancing yield and risk.

In this “marathon” and “relay race,” the choice of reinvestment options is also very critical. “In practice, the assets that can be selected are limited,” Su Gang said. At the same time, we need to continuously strengthen long-term interest-rate bond allocations, lengthen asset duration, and lock in medium- to long-term yields as standard actions. Also, more attention should be paid to balanced arrangements of asset maturity structures. By using staggered allocation across different maturities, we can prevent reinvestment pressure caused by assets concentrating at maturity.

When discussing reinvestment directions, Su Gang particularly emphasized exploring innovative fixed-income assets. “Beyond traditional fixed income, we will increase efforts to explore innovative high-quality assets such as ABS (asset securitization) and public REITs (real estate investment trusts). Diversifying asset categories can enhance the sources of portfolio returns and help address the downward pressure on net investment yields of traditional fixed-income assets.”

Su Gang provided an example to explain: for instance, public REITs (real estate investment trusts). “Growth potential in this area is still relatively large. Although liquidity is not high, it has market-recognized reasonable pricing. Insurance funds can enhance asset value through valuation analysis, risk management, and ongoing continuous operations. In the future, innovative fixed-income assets will be one of the areas where insurance funds increase investment.”

Caixin News: Besides the alternative investments you mentioned just now, what other areas will you focus on in the future?

Su Gang: Continue tracking areas such as advanced manufacturing, the digital economy, new energy, healthcare and eldercare; and look forward to further expanding QDII quotas to seize global allocation opportunities.

For insurance funds, what investment opportunities should be watched at the current stage? On this, Su Gang said that growth tracks related to economic transformation are worth attention, including technological innovation, advanced manufacturing, the digital economy, new energy, and healthcare and eldercare. “In these areas, if we can effectively capture valuation opportunities and closely track long-term industry development trends, it will help enhance the long-term investment returns of insurance funds.”

He also mentioned global allocation opportunities for insurance funds. “In any country’s insurance industry, global allocation is a long-term main theme. Global diversified allocation is also an effective approach used by developed economies such as Japan and Europe to cope with falling interest rates.” Su Gang believes that long-term investment returns are closely related to the economic growth environment. If insurance funds are seeking the stability of long-term investment returns, they will inevitably need to share in the high-growth opportunities of emerging markets through global allocation.

“China Taiping has continued, in recent years, to increase allocations to Hong Kong Stock Connect assets, using Hong Kong asset management companies as a hub for cross-border services linkage and as a gateway to access global high-quality assets,” Su Gang said. Under regulatory guidance, the company looks forward to further expanding QDII quotas and the bond “Southbound” channel, and enriching overseas investment products.

In addition, Su Gang also mentioned ESG investment capability and data-intelligence capability. “China Taiping will actively participate in supporting actions to address climate change, including renewable energy and green investments.” In his view, ESG investing not only aligns with the long-term and steady investment strategy of insurance funds, but also represents new driving momentum being built for the future. It can create a favorable operating environment for the liability side of insurance. “China Taiping will incorporate ESG into its investment research and responsible management practices, build its own ESG evaluation framework, and advance carbon accounting for asset portfolios.”

Digital capability is also where every insurance company competes for advantage. Su Gang said that during the long-term investment process, insurance funds have already accumulated a large amount of data and therefore possess advantages across a longer investment value chain. In the future, insurance institutions that can deeply embed artificial intelligence into core investment areas such as investment research, risk control, and allocation execution will build real efficiency barriers.

Throughout the conversation, it is clear that Su Gang is committed to “staying the course.” “We should not be easily tempted by unfamiliar factors. We should adhere to investing in familiar sectors and tracks, and insist on a direction that is tightly connected with the business models of insurance institutions. Only by diversifying resources across different areas and staying closely connected to the core business can we get through cycles and achieve the long-term goal of sustainable growth.”