China Pacific Insurance (Group) Co., Ltd. Class H

Ladies and gentlemen, good afternoon. Welcome to the 2021 CPIC Group Results Announcement. I'm Su Shaojun, Board Secretary of CPIC Group. It's my great pleasure to welcome you all to this event. We'll share with you our 2021 performance and also listen to your suggestions as to CPIC's development. We are in the middle of the COVID situation in Shanghai and you can see we are wearing masks. So given this special situation, we are conducting this event online and we are still using, we're still conducting it in the afternoon and in Chinese and provide simultaneous English interpretation. We paid a lot of attention to protection of the interest of the small and medium-sized investors. And we have also announced in advance and also used various methods to interact with our small and medium-sized investors. We have also announced in advance the time and the method to participate in this event. And we have solicited questions from small and medium-sized investors. Watch this event via video link and also raise questions on the video platform. We will give you timely responses and also you can watch the playback of this event via the official links. Next, I will introduce to you our senior management. They are Mr. Kong Qingwei, CPIC Group Chairman, Mr. Fu Fan, CPIC Group President, Mr. Gu Yue, CPIC P&C Chairman Mr. Zhang Yuanhan, CPIC Group CFO and Chief Factory CPIC Life General Manager Mr. Cai Qiang and also Ms. Liu Xiaodan, Mr. Chen Jizhong, Lin Yili and Mr. Hu Jiabiao, Independent Director of the company and Mr. Zhang Xuping will also attend this event first of all Mr. Fu Fan will give you a presentation on the company's performance last year. I'll give you the floor, Mr. Fu. Good afternoon, ladies and gentlemen. I'm Fu Fan, president of CPIC Group. Welcome to CPIC results announcement. It's my great pleasure to meet you online. The past year was a milestone in many ways for CPIC, international politics, and the economic landscape became increasingly complicated and challenging. And the world has seen profound changes in the once in a century pandemic. China has embarked on a new journey of development. But to maintain labor economic growth and stability, but the insurance industry entered a critical stage of transformation and facing uphill struggle in the value chain. Given this, we persisted in high quality development and pressed ahead with reform, stabilized business fundamentals while deploying towards emerging high potential areas to achieve both stability and progress in our operation. In terms of our business metrics, Our group operating income amounted to 440 billion yuan, a growth of 4.4%. Our group net profit attributed to the company reached 26.8 billion, up 9.2%. And our EV reached 498.3 billion, a growth of 8.5% from the end of 2020. And our total number of customers climbed to and the group AOM reached $2.6 trillion, up 6.8% year-on-year. And our comprehensive margin ratio on the CROS stood at 266%. While maintaining steady growth, we continue to focus on key areas and made progress, big progress in healthcare and retirement We joined hands with premium health care providers and launched our first health service brand CPIC Family Doctor with 400 medical professionals. And our health insurance subsidiary finished the shareholding restructuring and is now exploring new modes of specialized operation. We also set up a health care equity investment fund to focus on testing medical appliances Telemedicine and other medical services. We also achieved the milestones in retirement communities with 10 projects on the CPIC home up and running in nine cities across China with a total of 12,000 beds. We continue to enhance customer experience to further improve capability on the CPIC service. We have established this kind of a four level, We have a hierarchy for service offices spanning from group headquarters down to the grassroots branches. We have 800 service offices to reach out to customers. And we have also supported the China international import export for four years on end, giving them a total SA of 2.6 trillion. and other strategic clients with 591 clients benefiting from intragroup integrated services. By the end of the 2021, upselling covered 8.7% of the existing customers, up by 2.7 percentage points. The number of customers with total sum assured of over a million and above on TPAL reached 21% .9 million, up 28.2%. Group average number of insurance policies per customer reached 2.28, up by 7.0% from the end of 2020. The number of individuals with two insurance policies and above stood at 32 million, up 2.9%. And the number of customers holding insurance policies from multiple subsidiaries, which Ten million, up by 0.8%. On the other hand, we also promoted technological innovation. We achieved initial success in developing our data governance structures and building four middle platforms. We have, for example, completed relocation of the Luogin Data Center and put in place an operational model underpinned by three data centers in two locations. so that we can actually provide responses to hundreds of millions of customers within seconds. CPIC Cloud entered large-scale production to offer upgraded cloud computing to digital applications. And based on technological applications, CPIC PC can carry out dark factory for operation and CPIC Live achieved cloud-based distribution and long-distance double recording. And the CPS AMC explored smart investment research. Going forward, we were committed to a market-oriented professional capability building. We translate corporate social responsibility into sustained engine of growth to usher in a new chapter of growth. We incorporated ESG into Business Management formulated ESG top-level design and set up a governance structure. The board serves as the top decision-making body. And under it, we also have investment decision-making and the ESG committee. And at the end of 2021, we signed into UNFI principles for sustainable insurance and also the UN supported the principles of responsible investment. We continue to carry out actions in environment, society, and governance. In environment, we initiated the second phase of Sanjiangyuan Ecological Park, covering 100 hectares. And also, we underwrote wildlife liability insurance in Yunnan, our CPIC-PNC Yunnan branch. became the only insurance partner of the 15th COP of the UN Convention on Biological Diversity. Also, we conducted an all-round upgrading of anti-poverty insurance, which had been rolled out to over 1,000 counties, benefiting nearly 400,000 vulnerable people. And we established CPIC Blue, the first of its kind in the insurance industry, and launched a three-year to care for elderly people with dementia. In terms of governance, we became more diverse, international and professional. We have 87% of non-executive directors and 27 women directors. Also, we improved our smart transitioning of financial management and risk control and optimized internal control system and formulated implementation measures in response to new regulation. In terms of the financials, our EV maintained a steady growth and by the end of 2021, it amounted to 498 billion up by 8.5% year on year. In terms of composition, in-force business amounted to 211 billion yuan up by 8.5%. by 4.5% year-on-year, and the group adjusted net worth reached 287 billion, up by 11.6%. In terms of the movement, positive contribution mainly came from expected return on EV and MBV. In the past two years, with increase in EV and the slowdown of MBV growth, our MBV's contribution to EV has diminished. At the same time, the EV movement was also impacted by profit distribution, operating experience variance, and the changes to the methods and assumptions and models. In terms of OPAT, if we strip our short-term investment movement, changes to evaluation assumptions, and the impact of material one-off factors on the basis of net profit, we reported 35.3 billion in OPAT attributable to the parent, up by 13.5%. Of this, that from life reached 28.2 billion, up by 9.2%. Faced with the resurgence of COVID-19 around the world and the complicated environment of profound adjustment of the Chinese insurance industry, MBV growth has come under pressure We met the challenger head on, adhere to high quality environment and maintain the stable growth of the business and demonstrated resilience. Our MBV fell by 24.8% to 13.4 billion of this annualized new premiums. For the purpose of MBV calculation amounted to 57.1 billion, up by 24.4%. Because of the challenging market environment and the shift of business mix, our MBV margin decreased by 15.4 basis point to 23.5%. We implemented the Changhang Action Program in an all-around way to seek a more diversified channel mix with agency force at the core CPIC Life reported $1211 billion in GWPs, down slightly. By channels, the agency channel launched a restructuring to build a career-based professional and digital agency force, moving from short-termism toward long-term development. With regular pay, new business amounting to $24 billion in 2021, up by 11.6%. Bank Assurance Channel focused on banking outlets, products, and the personnel and boosted the strategic cooperation with key partners and deployed the resources in key areas. Their new business premium reached $6.6 billion, up by 331%. Group Channel, also saw sustained development of government-sponsored business and enhanced capability. GWP from Group Channel reached $13.01 billion, up by 19%. We also served as the lead underwriter of the Hu Hui Bao in Shanghai, which covered 7 million people and set a record. Now, For the agency channel, we are building an agency force with the three directions and the five most. That is to say, career-based development, professionalism, digitalization, and also give agencies space for generous income, most powerful entrepreneur platform, most caring CPIC services, most professional career development system, and most comfortable working environment. Last year, we also designed a new basic law and professional sales supporting platform on the career agency force project. Now, based on the new basic law, we are going to drive core manpower growth and productivity gains and enhance business quality control, upgrade agency force in an all-around way. In 2021, our CG or equivalent of MDRT headcount grew by 170% from 2020. Our monthly first year premium per agent reached 4,638, up by 42.3%. We are committed to build a brand new golden triangle system of products and services to focus on the needs of customers. Healthcare, Wealth Management, and Retirement. We also launched Jin Dian Ren Shen product. We upgraded the whole life CI product under the new CI definitions to cover most critical illnesses. And we also launched Hao Shi Shen Huang, first whole life CI products, and also Xin Cong Rong, annuity product, and Xinxiang Shichen endowment product. Now these new CI products acquired more than 5,000 individual customers since their debut with over 90 billion in total SA. We also enhance service supply under CPIC home brand. For example, our and the retirement community in Chengdu and Dali went operational, and our CPIC blue passports covered nearly 18 million customers, accumulatively. In terms of P&C, we deepened the reform, intensified the business quality control, and delivered steady growth in premium and stable combined ratio. In terms of GWP, last year our performance was $152.6 billion, increased by 3.3%. Of this auto business was $91.1 billion, down 4%. Now auto business grew by 16.9% to $60.8 billion. The combined ratio was 99%, same as 2020. And of this loss ratio, was 69.6% up 8.2 basis points and expense ratio 29.4% down by 8.2 PTs. We adapt to challenges of the comprehensive reform of automobile insurance and the major natural disasters persisted in high quality development and to enhance our risk screening and management to improve business quality and our combined ratio was 98.7% up by 0.8 PT. Of this loss ratio was 71.1% up by 10.6 PT and expense ratio fell by 9.8 PT to 27.6%. We deepened closed-loop management for customer segmentations and enhanced direct access to customers and differentiated management. We built an integrated smart operation system for individual customers covering online and offline and connected the front end, back end and the middle platforms. We sustained the increase in the online ratio and focused on typical life scenarios of customers. For example, staying at home, traveling, going to doctor, et cetera. and we also achieved the improvement in non-auto business with a combined ratio of 99.5% down by 2.4 PT. And for health insurance, we accelerated innovation of personal lines and cemented the current platform for government-sponsored insurance, expanded the coverage of government-sponsored health insurance. In 2021, we reported 12.1 billion in GWPs, a growth of 37.3%. Liability insurance stepped up support for the modernization of China's governance and deepened its first mover advantage to serve local economy. This business line delivered 10.9 billion in GWPs. in 2021, up by 24.6%. In terms of the agricultural insurance, we continue to push for expansion of coverage, diversification of product, and of standards. We enhanced innovation in products and services. Last year, the business loan delivered 10.3 billion in GWP, up by 19.8%. In terms of asset management, our group AOM, maintained a steady growth. As of the end of 2021, our group AOM totaled 2.61 trillion, up 6.8% year-on-year. Of this, group in-house investment assets reached 1.81 trillion, up by 10%. And third-party AOM was 789.4 billion, up by 0.2%. Last year, we achieved a solid investment performance. Comprehensive investment yield fell by two PTs to 5.4%, which is largely because of the decrease in net of a fair value movement of AFS, assets booked as other comprehensive income. Our total investment income was $93.1 billion, up by 10.9%. That's mainly thanks to increasing gains from securities trading and the interest income on fixed income investments. And the total investment yield was 5.7% down by 0.2 PT. Our net investment income was 73.061 billion, up by 8.8%. That's mainly because of the increased interest income on fixed income investments, but our net Investment yield was 4.5% down by 0.2 PT. We were guided by FAA and conducted PAA with flexibility to seize market opportunities. And also to, in terms, we persisted in dumbbell-shaped asset allocation strategy. We increased allocation into long-term T-bonds and government bonds to extend asset duration and control reinvestment risk. On the other hand, we moderately increased investment in equity assets, including private equity, to increase long-term returns. In terms of investment portfolio, by the end of the reporting period, the share of fixed income assets stood at 75.7% down by 2.6 PTs and that of the equity investment was 21.2% up by 2.4 PT. And of this stocks and equity funds amounted to 11.1% of the total investment assets up by 0.9 PT. We maintain the prudence in credit risk exposure and enhanced risk credit control and took effective steps to mitigate the risk. 99.1% of enterprise bonds and financial bonds issued by non-government-sponsored banks had an issuer or debt rating of AA or A-1 or above. Of this, the share of AAA reached 93.4% of non-public financing instruments with an external credit rating the share of AA-plus and above. reached 98.8% and of this AAA, share of AAA was 94.7%. Except for those exempt from debt issuer external credit rating, the rest all have a guarantee or pledge of collateral. Underlying projects of our non-public financing instruments spread across sectors such as infrastructure, real estate, communications, non-bank financial, Blandi, the nominal yield was 5.1% and the average duration of 7.3 years. That was the numbers. Looking ahead, the next 30 years marks the start of a new stretch of a journey for CPIC Group. Under the leadership of the board, we will stay focused and work even harder and strive for substantial growth. for Changhang Action Program to reshape core competitiveness of life business. And PC Insurance will enhance underwriting profitability. And for asset management, we will step up alignment and the coordination of liabilities. We will continue to foster ecosystem of healthcare and elderly care, provide customers with comprehensive solution of products and services. and enhance regional differentiation and specialization. We will improve the technology governance structure, encapsulating management research and use, enhance professional capability, building for core R&D of insurance frontier technologies, and then nurture a common ecosystem for competitive insurance technology applications. That ends my presentation. Thank you. Thank you, Mr. Fu. Now we have the Q&A session. You can ask question over the phone or via the video platform. And we will select some questions over the platform. And if you want to ask your question over the phone, please press star and the one to queue for question. Please identify yourself and your name, your employer before you ask questions. Please do not ask more than two questions. To ensure the voice quality, please put yourself in a quiet environment and please put yourself on mute after you ask the questions. Please do not use the speakerphone. Well, let's welcome the first question from Hydrogen Securities. Thank you. I'm Sun Qin from Haitong Securities. I have two questions here. First one about dividend payment. We understand that. Could you speak louder, please? Are you better now? Could you repeat the question, please? Can you hear me? There seems to be some kind of technical problem. Okay, could you repeat your question, please? Thank you for your presentation. I'm from, I'm from Hightown Securities. Two questions from me. Number one, about the dividend payment. Now we understand that the, You mentioned that you're going to consider accounting profit and OPAT to ensure the stability of dividend payment. Now, OPAT increased by 14%, but your dividend payout actually will be down by 20-something, 20%-something. So what's the reason? And what is your future policy for dividend payout? And second, about the Changhang Action Plan program. Now, it has been released for over a year now. So could you tell me something about this program based on your performance in 2021? So what's your evaluation of the Changhang program? Is it effective? And what are your other measures? Thank you. Okay, I'll answer your first question. Now, actually, given the CRAS phase two, there will become more stringent rules for the recognition of capitals, and the risk will become even severe pressures. So, actually, we see a lowering of the solvency ratios, so to ensure that we can maintain a steady We have actually formulated plans to cover the subsidiaries in terms of capital ratio. And we are also looking at, well, what kind of a leeway we have in terms of CDRAS Phase II. For example, apply for a transitional period. or issue some kind of death. So all these are uncertain at the moment. So we are prudent in determining the dividend level for 2022 so that we can ensure the high quality growth for the company. Now we are actually preparing for the three year capital plan based on CRAS phase two. But we would say that long-term return to the shareholders will remain unchanged. Give them payout is a very important issue for all shareholders. So given this kind of changes from the regulators, we should look at the long-term. We always pay a lot of attention to our return to the investors. We will try to maintain steadiness but also consider the changes from external and internal conditions. Let me just add a little bit on this. Now, our chief actually told you about regulatory changes, especially under the launch of the CRAS phase two. So you see for the lead players in China, actually most of, All of their solvency ratios are influenced by this phase two of CROS. Of course, we are talking to the regulators about the CROS phase two. But anyway, there are some uncertainties. So for 2022, the dividend payout, we made some adjustment. And the second important factor is our future strategy. Well, last year, We got our 14th five-year plan approved. And as I mentioned briefly in my presentation, we are going to focus on the health-related business. We will invest a lot of resources, and also we will make investment in big data and in terms of technology. And also going forward, We are going to look at areas in the Yangtze River Delta and the Greater Bay Area, et cetera, et cetera. So we are making strategic deployment. So we want to support the business growth for the current period. But not only that, we also need to prepare for future growth in a strategic way. So we need to have some leeway or room for capital utilization for the future. So if you look at the 30-year history of the CPIC group, you would say that we always pay a lot of attention to the return to investors. The payout ratio, dividend payout ratio, if we look at the peers, we remain at a high level, always a high level. And if you look at our peers, apart from New Planet Life, If you look at China Live, Ping An Insurance, and Tai Ping Insurance, and AIA, they have announced their dividend payment plan. For CPIC, our dividend payout ratio, 36%, and 3.7% dividend rate. Now, these numbers are still in the first echelon. So we will maintain this kind of a continuity and the consistency. So while meeting regular requirements, we will fully consider the rights and interests of investors and also business development needs. So as a member of the management, we would of course want to answer to the request from investors, but also look after the Future growth of the company. So this is a challenge for us. We will pay a lot of attention to it. We need to think in the long term. And we also hope that the market can also look at the issue in a long-term perspective. Thank you. Now your second question about the program. It was launched last year. We want to give customers the best experience. It's a five-year plan. We prepared it for six months, and on October 1st last year, it was officially launched last year, October 1st. So I would say we spent three months To prepare for it, we did a lot of communication, talked to the front line, and actually, January 1st this year, it was officially launched, including the new basic law for agency. Now, you ask me, how do I see this program? Now, first of all, actually, after a lot of communications, I would say that I would say that now everyone in this company are on the same page. We are all on the same page in terms of how we think about this business. That is to say, we must carry out the supply side reform. We cannot wait anymore. We should do it sooner rather than later. So we are all On the same page on this, we all agree. And after the official launch of the Changhang program, we are now building the five areas for the closed-loop operation. That is to say, recruitment, training, and cultivation, and the one-on-one business sales and also needs-based analysis and also professional management, professional activity management and also customer operation. And another area is the training, whole system of the training. I would say In terms of the effect, I would say we are on the right direction, and the results are basically meeting our expectations. You can see from 2021, in terms of per agent premium per month, that grew by 42%. Well, this is a very important indicator in terms of business quality. So I would say in 2021, in terms of enhancing our business quality and enhancing our productivity, we laid a very good foundation in 2021. And I would say we, well, we live up to our expectation for the first few months of 2022. It's not important to launch new measures all the time. We need to return to the fundamentals of life business. We mentioned about career-based professional agency force. So that is to say we need to become very professional. For example, we should do it for 10,000 hours before we become Professional, Specialized. So that is what we are going to focus on. That is to say, we focus on the five areas I just mentioned to become really professional and good at it. Thank you. Thank you for the answers. Now let's welcome the second question. Now the second question comes from Credit Suisse. Thank you for giving me this opportunity. to ask the questions and I may just ask more about dividend payment because also I received a lot of questions on dividend. Now, given CROS phase two, we made some adjustment to dividend payout, but I understand CROS phase two actually has impact on everyone in the sector. So my question is that What's the impact of the CROS Phase 2 on CPIC? Are they impacting you particularly significantly? Because actually the adjustment was bigger than investor expected. And secondly, I would like to ask about the OPAT and the net profit. What are the What factors do you consider? Because if you look at your peers, they say their dividend payout is linked to their OPAT. Now, what about CPIC? What's your consideration here? And the second question also about CPIC Live, we noticed that you released a number of CG increased by 170%. Could you give me more details about new business value and also the recruitment? When will it bottom up? When will we see some improvements? Now, let me answer your first question. Try to answer your first question. Now, under CROS phase two, CPICs in terms of product mix, we actually have a high share of protection products. So the impact of CROS II might be bigger for CPIC than for our peers. So our consideration is a comprehensive consideration. Now, if I may just add, as Mr. Zhang mentioned, the impact of the CRAS-2. Now, CPIC was invited to participate in the CRAS-2 preparation. I would say this CRAS Phase II impact on the big players, big insurers in China are pretty much the same. Not big differences there. But CPIC is more prudent in our adjustment, and we look at the issue in a long-term way. Last year, dividend payout ratio was quite high for CPIC Group. Apart from the regular dividend payout, we also had a one-time dividend payout because of the 30th year anniversary of CPIC's founding. And also, this time, we look more at the comprehensive factors and more towards the prudent side. Maybe we can ask for some kind of leeway from the regulators, for example, but we are not sure about that. There's some uncertainty. We think more about the long-term strategy of CPIC. For example, in health-related business, in Technology Investment, et cetera, et cetera. But we believe all our strategic plans will benefit investors in the long run. So I would say you should look at the long term in terms of your returns. Thank you. And for your second question about the life of business of CPIC in terms of the Q1 performance and also and our expectations. I would say, now this agency transformation, I would say is a very big change for the whole industry. Previously, the industry focused on the Kai Men Hong or the grand opening for Q1. But now we move towards monthly, weekly, or even daily business development so that they can become a career-based professional team. And the second point is that we adhere to regulatory requirements. We do not suspend products in order to enhance sales. We do not actually pitch the grand opening. So you would say the seasonality or the business pace this year is very different from the past. So this is our view on business, the pace of business. Despite all that, I would say we still focus on our Transformation, that is to say, move from the number of agents to the core, number of core agents. We move from the premium growth to production or productivity growth. So if we look at these indicators, I would say in Q1, the results were within our expectations. What's more importantly, return to The fundamentals of insurance of our business will focus on CI sales capabilities, focus on the daily activities and the serving of people, focusing on activity management on a day-to-day basis. So as I mentioned, the five key areas. So as long as we can be very good at the five areas, We can improve the business. But of course, for any kind of transformation, before the new model kicks in, we should persist in doing the right thing. As long as we can do that, we will see good results. Well, thank you. Now let's welcome the next question. Now the next question comes from Guotan Junan Securities. Thank you very much. Thank you very much for giving me this opportunity. I'm Xie Yusheng from Guotan Junan Securities. Two questions. Number one for Mr. Gu. Now for PNC after the reform, auto reform, auto reform. Now the premium impact was basically gone. What about, what's your forecast for 2020? Two. Well, combined ratio for 2021 was still on the increase. So what's your view on combined ratio? And for new energy vehicle insurance, what's your expectation? Because new energy manufacturers and they are also making some investments in insurance sector. So will there be some kind of impact? And also second question about asset allocation, your equity share of equity investment was up in 2021. Now, what about this year? What about the mix for this year? Thank you. No, thank you. Let me answer your first question about commercial auto insurance reform. Last year, 2021, that was a whole year after the reform. Now originally, initially we had a lot of volatility. Now we have more stability. If we look at the industry as a whole, the premium level have made some actually recovered, I would say. Now we are in line with the industry average. So if we look at the combined ratio for the industry, well, there's still some pressure. Now for CPIC, after one year hard work, we actually improved the customer operation, enhanced our pricing, for example, So we see some good results for combined ratio. So for our combined ratio for auto insurance, 98.7%, so which is considerably or evidently better than industry average. Now, what about this year? Now, so far, if we look at the few months of this year, the premium was on the recovery, for auto insurance, but I cannot make a whole year's forecast because there are two very good, very important sector. One is the growth of automobile industry. Secondly is new energy vehicle or EV. Now, if we look at the whole industry, auto industry, it's quite under quite a lot of pressure. New energy vehicle is another picture. The growth is there. Actually, the exclusive provisions for new energy vehicle was released toward the end of last year. And the consumers also had a lot of questions on the new exclusive provisions for new energy car. Now, the standard premium actually decreased a little bit under the new provision. But the picture varies from company to company. For CPIC, PNC, under the new regime, our total premium actually went up a little bit for new vehicles, new energy vehicles. If we look at the two years, past two years, the growth for insurance for new All of these new energy vehicles was very fast. Around 30% to 40%. And as of now, actually we see over 100% increase. And the share of insurance for new energy vehicle also went up considerably. Now it's more than 10%. So you can see this kind of growth trajectory, very fast growth for new energy vehicle insurance. And we also designed new innovative models for this, which was welcomed by the industry, by the market also. But of course, if we look at the current period, combined ratio, It's quite high for a new energy vehicle. But if we look at the timeline, I would say the business quality is improving all the time. So we believe, so as long as we do it in a scientific way, we can contain the cost and make it into a growth New Growth Area. So we remain optimistic about it. So as you mentioned, some of the new vehicle manufacturers, new energy vehicles manufacturers making investment in insurance sector. Of course, that would bring some pressure. But on the other hand, insurance is a very professional sector. For example, Underwriting, pricing, etc. It takes a lot of time and accumulation of expertise and the professional people. So all these cannot be replicated easily. So from this perspective, I would say insurance companies have our unique competitive advantages. We hope that, of course, we hope that we can become more enabling. I would say competition would bring improvement. So this is a good thing. Thank you. Let me answer your second question about asset investment in 2022. Now, of course, all of you are professional investors. So I believe you all agree that for 2022, it will be quite challenging in terms of investment, especially for the macro economy. And the downward pressure is quite big. And the Chinese government also said that, well, steadiness should be the key word for 2022. with active and aggressive physical policies. Now for CPIC, starting from 2019, China's stock market went up for three years. So given this kind of economic pressures in China and also challenging uncertainties, in terms of the geopolitical situation. So CPIC will remain prudent. We will look at the liability side to meet the regulatory requirement and CWAS requirement so as to improve diversified asset allocation to meet long-term asset liability matching needs to focus on down bell strategy So if we look at the strategy, given our uniqueness and the market requirements, actually our share of equity investment can still be improved a little bit. Of course, for Q1 this year, the capital market adjusted considerably. But for CPIC, we believe the capital market is more a matter of release of risks and a reflection of long-term investment value. We actually see a lot of potential opportunities and the need to see these opportunities. But of course, for the whole year of 2022, we will remain prudent about the stock market opportunities Guided by our SAA, we will focus more on disciplined investment or TAA to seize structural opportunities on the stock market. But also in terms of our investment in real estate sector, let me just tell you, if we look at the big categories, CTIC Group in 2021 our investment type real estate was 7.5 billion and 8.9 billion in terms of a real estate fund investment that is in terms of a percentage that's less than one percent of our total investments and some underlying assets as real estate including fixed income and equity type. Now, all these combined is worth less than 100 billion or also a small percentage of our total investment. Of course, there's some kind of a default on the market. There were reports of defaults on the market for real estate companies, real estate developers. Now actually we have no fixed income investment in real estate sector and for equity investment our exposure to defaulted real estate developers was less than 10 million because we always pay attention to risk management. We have very strict selection criterias. So currently all the issuers that we invested in have a quite good risk control and financial position. We focus on the key areas, the infrastructure of key areas will remain diversified in multiple areas so as to achieve stable cash flow and we will see trend Well, opportunity, trendy opportunities. So that's our big strategy for the real estate sector. Oh, thank you. Let's welcome the next question. Next comes from Goldman Sachs, SS. Thank you. I'm from Goldman Sachs. I will now ask about the dividend payout question. Now, because your 5% dividend payout is quite good. Now, this time around, you become more conservative. Now, yeah, well, I can understand that. So, when we have more certainty on CROS II, maybe your dividend payout can go back. Now, my question about the transition for transformation of your agency channel. The total half count, actually jumped a lot because it went from 500,000 something to 300,000 something. So anyway, I mean, what's your view on the number of agents, total agents? What's your future plan to do for... for the recruitment or the number of agents. I'm sorry, I didn't quite get your whole question. Could you repeat a little bit? Now, my question is about the number of your total agents. Because now, actually, the number of your agents has now went back to the level at 2014. And that's for the whole industry. Now, but what about CPIC? Are you going to remove IDO more low-performing agents? Oh, thank you. I understand now. Now, as you mentioned that actually the cancellation of the agent test or exam in the industry in China. Now, the industry focused on massive recruitment to drive up the business for the agency channel. Starting from 2014. But, well, with the diminishing of the kind of population dividend, this no longer works. So, because our customers are becoming more demanding and more professional themselves, so this model of growth cannot be sustained anymore. So we should change or transform. So that is what we are doing. We are doing this kind of supply side reform. Many people believe that actually China's life insurance premium was down for several years. So does it mean that the demand is diminishing? But actually, based on our survey, our study across many cities, actually, The market demand is still huge, be it for life insurance or health insurance or CI, etc. Because actually China's per capita GDP exceeded 10,000 U.S. dollars. And once there, there will be explosive growth, potential growth for insurance. So we believe the demand side is there. No problem about that. But the issue is the supply side. There is a mismatch between demand and supply. For example, the middle class, their needs are not met. They will have more diversified needs. They would want professional and individualized services. So we need to provide them with Thank you. Thank you. The pure number of agents. Actually, if you look at the government reports, actually, our peers are all seeing huge drops in terms of total number of agents. We don't care about that anymore. We care more about effective agents or core agents. We'll tell you more numbers about the numbers of our core agents, their activity ratio, and their productivity, their income, et cetera, et cetera. That is our key focuses now. So maybe the number of total agents, total number of agents might go down still further, but for the next few quarters, we will see Well, steady growth of core agents. And we will choose these performing agents to train them to improve their productivity and also improve their income. As long as they have more income, they will try to have better service and the better quality of business. So you're right. Yes, the total number of agents are happening across the industry, but that's not what we care most about. Thank you. Thank you. Let's welcome the next question. Next will come from Sittique. Here it is. Thank you for the opportunity to ask questions. I'm Li Xin from CITIC Securities. Now my question is for Mr. Gu. First of all, congratulations for the good performance for the PC business in terms of volume and profit, especially for non-auto growth of 16% and also improved your combined ratio. And for liability and agricultural insurance, you did better than peers. So non-auto business, what are the reasons behind your good performance? And also, follow-up question. There are more competition for non-auto sector. What's your strategy for 2022 and beyond? And another question for non-auto sector. Now, some of them have more high receivables. So how do you deal with that? Thank you. Now, as we mentioned about the auto reform, commercial auto reform. So some small insurers actually turned to non-auto sector. So this non-auto sector becomes more competitive. For 2021, the market was quite unique because of COVID and because of the volatility economic growth. There's a lot of exposure, risk exposure. So all these have combined to actually produce slow growth for the non-auto sector. Although the growth was slowed down, but actually we are still registering double-digit growth for CPI, CP&C, or 16.9% to be exact, clearly above market average, and combined compound growth ratio basis That's more than, we have more than 28%. Now, the main growth driver came from health, liability, agricultural insurance. Why these three areas? Now, first of all, is China's strategy, national strategy, for example, for health, for people's livelihood, et cetera. And also, Now these three areas are actually previously most neglected or weakest area in China's insurance industry. So actually we started to make the preparations in these so-called new areas many years back. We did a lot of the preparation and now we are reaping the fruits. While we grow our business, we pay more attention to the improvement of business quality. Now, 2021, I would say we did quite well in non-auto sector. So I would say we achieved both growth of value and the volume. And for business quality, we focused on This kind of a collaboration or coordination that is called collaboration between pricing and claims so that we can achieve synergy internally. And secondly, we focused on the use of technology to achieve interaction between underwriting and claims settlement. And we also focused on the development or operation of our customers. So while we develop our auto business, our non-auto individual business also achieved faster growth. And we also focused last year on some of the long-term problems. We will break down the problem. We will focus on the big problems to break it down and solve them one by one. So I would say last year we achieved some progress. But going forward, we still have a lot to do. Because non-auto sector has huge potential. And secondly, because A lot of the small and medium-sized insurers are entering non-auto sector. The pricing is becoming more competitive. And there is this kind of pressure from the underwriting side, especially global underwriting side. We need a lot of expertise to handle all this. We have been improving our professionalism and expertise for non-auto sector for the past few years. So we are confident that we need to focus, remain focused on non-auto sector to increase our market share and also by improving our capabilities which the continue to enhance our non-auto high-quality growth. Thank you. Because in the interest of time, we only have time for one more question, one last question. Next question comes from CICC. Thank you. I'm Martin Ting from CSEC. I have two questions. Number one, you mentioned about the health and retirement sector to care about retirement and health of elderly people. So how can you differentiate yourself in this sector? And second question is about Chairman Kong, for Chairman Kong. How do you sum up the year 2021? And what's your prospect for 2022? Well, thank you. Thank you. First question about the health related sector, our strategy, and our differentiated strategy. Let me answer you this question. Actually, our strategy for health sector were approved by the board. So we paid a lot of attention to it. And actually, we set up a task force headed by Chairman Kong so as to implement various projects under this plan. Now, actually, now all work streams are going smoothly. For example, healthcare or health insurance, we improved our business quality and the margin for health products may remain the stable and health premium. And also we, in terms of the health premium and the number of customers, we also see steady growth. And also in terms of the health ecosystem, we, are developing in terms of the online hospital to leverage more on technology. Because we have more than 100 million customers. We collaborated with Rui Jing to launch the Guang Si online hospital. And we also established, launched the CPIC family doctor leveraging AAA hospitals and also good pharmacies and the health check institutions so as to build an ecosystem for health services. And we have more than 1 million customers for the CPIC Family Doctor launched last September. And we also actually offer, well, around the clock services via the CPIC family doctor platform. We also have some, for example, collaborated with United Family Healthcare to make further investment in the health sector. And we also collaborated with Sequoia China to set up a new health foundation. and to tap into the digital health sector. And last March, we get approval from CBIRC to actually establish a PACIFIC capital investment to make investment in health related sectors and focus on the investment in these health related areas. So that's our main deployment in health-related areas. Thank you for your second question. First of all, I'd like to take this opportunity to thank all our CPIC colleagues, because as you know, the COVID situation is very severe in Shanghai at the moment. So our colleagues in Shanghai actually did a lot of the hard work to deliver the board meeting last Friday and also release of our annual plan, annual report. And also they worked for several days and nights for this event. But also I'd like to thank all of the investors participating online. You should also take care. As far as I can remember, This is the third time I'm wearing a mask, face mask, to take part in a results announcement. Now, Shanghai is under a lot of pressure due to COVID because, as you know, the Huangpu River is very quiet today. But I believe we will win the final victory. Shanghai will return to its dynamism. Looking back at the last year, I would say we actually, we fought ahead in steady steps. So I would say stability, that means stable growth, and the progress means we are making progress. So I would say for CPIC as a whole, In terms of our strategy, life is, we launched a program for CPIC life, right? And you also ask a lot of question about the program. in Chinese means the long sale, long sailing, literally. Now, this is what we're going to do. We're going to become a professional life insurance company For the industry, we are resolute in doing so. But of course, resolution is not enough. If we want to win victory, we must have patience for P&C. Now, I believe, well, you asked several questions for P&C business, because last year, we have some Progress for PNC. So, for PNC, I would say we should continue with our progress. What do I mean by that? I mean we should continue to reach out to our customers, to have refined management and development customers, to start or resume our high-quality growth. Now, We just conducted a PNC work meeting and Mr. Gu have laid out a four-year plan for growth. And our asset management should also play a reinforcing role because we should care most, care both about The asset side and the liability side. Of course, we should seize upon market opportunities as much as we can while managing risks effectively. So we should strike a balance and deliver a relatively good investment return. We will remain committed to long-term value growth Thank you very much. more than 800 CPIC service officers. They are going to serve our customers, go to our customers in times of difficulties. For example, our people would visit our customers in more than 1,000 counties across China. So we have a lot of affordable, inclusive insurance Services or products to our customers. So, CG&C become more acceptable to our customers, become more concrete to our customers. Our services, as mentioned by Mr. Fu, actually is more about insurance plus service. And we have one more thing. That is the governance. So it's like a safeguard for our business. Our board members have become more and more diversified and professional. They have an international background. They are helping us to become more forward-looking in terms of big strategies. Now, let me just tell you one thing. Mr. Fu and I, myself, we had a board meeting. We are two executive directors, and our independent directors are also there. So they say we should tell you more about our agency transformation, our strategy for the health sectors, So of course, we are now doing this event. And of course, our communication would last beyond this event. Now what's my future, I mean, perspective for the future? I would say the challenge is there, but I remain confident. I will not delve too much on the challenge we face now, be it the market or the industry. And of course, different companies have different challenges. But we see a rapid change of external environment. But I believe it's in this kind of a situation Our persistency will be tested. Yeah, you ask a lot of questions about our dividend payout ratio. We should patiently give you answers. We should remain committed to value growth, to long-term growth, to become a leadership, a leader in the healthy and steady development of insurance sector. Five years ago, our judgment on the industry trend turned out to be correct. As Mr. Tsai mentioned, the two returns, to return to our aspiration and return to the fundamentals. CPIC shall be a long-term player. So we need to return to our original aspiration and the fundamentals. We launched transformation 2.0. So I would say that gives us a new gene to seek change proactively. So you should not only read our annual reports, but also Our sustainability report. So, because that is the first sustainability report of CPIC in its 31st year history, 31 year history. Through those reports, you would see that CPIC is becoming more resilient. We are changing. So given these drivers, many of the things we are currently doing and what we plan to do will bring us a more promising future. So that is what I mean by the future is promising. Well, to be more specific, I would want to turn your attention to the transformation of our agency channel. We will focus on eight projects. We will not rest until we meet our results, we meet the targets. Of course, there will be obstacles to the transformation. It's only natural. But we will not turn back. We will not actually beat around the bush. We will not take a detour. Secondly, our health and retirement community are up and running despite the COVID pandemic. We are still going to build 223 retirement communities this year. We are talking to local governments. We hope to actually open 223 or start construction 223 and start construction and complete construction for 223 retirement communities. So we... If we did that, then we have basically met the strategy, strategic plans for health-related industry. And for CPIC Family Doctor, in Shanghai, we have 400 full-time doctors, and the CPIC Family Doctor platform will enter a new stage of development this year. And for rehabilitation center, We are also making solid progress. As we mentioned, we will try to become an insurance with best customer experience. So this kind of a long-term service capability must be there. And certainly, CPIC Capital was established last year, and We have a joint office between CPIC and the Sequoia to explore opportunity in health-related areas. So all these moves will help us to explore this new area. And as Mr. Fu mentioned, the Guangzi Online Hospital, and we have also new front New Frontier Health Company. We have stakes in them all. Now, we also newly established a CPIC technology to develop or leverage technology and translate them into business growth. Given the COVID situation in Shanghai, I'm talking to relevant stakeholders. Well, actually, even just this day, we have more than 5,000 employees working remotely via VPN for CPIC. Now, all these measures, and especially technology application, means the future for CPIC. And fourthly, we will push ahead with our ESG initiatives. Last year we signed the two protocols, and last year we also released an ESG report. So green, we will be green, seek green growth. Of course, one more important thing for ESG is the people. Last year, we will continue to deepen our reform of talent cultivation and talent development We focus on recruiting high-end talent and cultivation of reserved talent, young talent. But of course, to achieve success, well, we need time. For 2022 and years beyond, as a responsible company, CPIC should remain stable, prudent while seeking growth, especially given this kind of a very stringent situation. As I mentioned in the sustainable report, how can we remain focused to achieve sustainability? We should leverage all the factors to achieve synergy. Of course, we should work hard together to bring CPIC to a new level. Thank you. Thank you for your answers. And before the meeting, we actually solicited questions from small and medium-sized investors. And their questions were centered on the dividend payout, the Changhang program, auto and non-auto sectors. Actually, most of them have been touched upon in the Q&A session. We are still getting a lot of questions from the video platform. We just select two of them. The first one comes from Mr. Wang, an individual investor. Now, the question goes like, your stock price was not good during the last year. So how do you see that? The second question is about, are you going to launch this kind of high-end medical insurance? For example, for overseas treatment, But if you have, are you, do you have enough provider system to do that? Now the first question, of course, actually the stock price on the secondary market were, well, influenced by many factors. So last year our stock price was not good, and I would say that currently CPIC stock price was undervalued. I believe in terms of the reasons, there was COVID, there's uncertain economic situation, also geopolitical tension, and also volatility on the stock market, on the capital market. And the insurance sector is also undergoing transformation and the reshaping of value chain, et cetera. But despite all that, we say that the long-term trend for China is good. The people are aging. So the fundamentals for long-term growth of insurance sector is still there. So China's life sector or insurance sector is still one of the most dynamic in the world. And if we look at the market numbers, The total premium was 4.49 trillion for last year. So density, insurance density is 3.94%, and the average premium was 3,000 something. So compared to natural market, we are still at this early stage. On our side, we will work hard. We remain committed to the long term to our main business. And you also heard a full presentation on our past performance last year. You would say our OPAT, our EV remained on a good trend. And especially, actually the number of our customers increased by 20 million. So on the long term, we are making the transformation in terms of talent development, in terms of the incentives and the governance, and we are also making deployment in terms of health and technology application. Now, second question. Now, first of all, in terms of strategy, We focused on the health related sector, retirement related sector, because of the two reasons. Number one, market demand. You see in China, consumers actually are having bigger and bigger demand for health. And the COVID actually stimulated need for health related services. So if we look at the health insurance premium, This is evident. 2021, actually health premium reached $880 billion across China. Double the growth rate of the life insurance as a whole. And China is also aging. So retirement service will be a very big factor in the future. And of course, the whole industry is undergoing transformation. So we need to change some of our traditional growth model, this kind of a massive growth model, relying on the number of agents, focus more on sales rather than service. We don't focus on the needs of customers. Actually, there is a mismatch of demand and supply. I would say, both externally and internally, we need to do a lot of work. And also, we have this potential opportunities. Mr. Fu and Chairman Kong have given you a lot of details on our future strategies. I would say CPIC will focus on health-related sectors. We will either Building House or collaborate with external parties to actually develop our product plus service model. So I believe all our investment and input in this will produce results and this will actually also enhance our interaction with customers so as to increase the stickiness of our customers. So we believe CPIC is a first mover in this regard. We hope to become a benchmark. Well, that was the answer to the two questions from small and medium-sized investors. In the interest of time, we will End of this Q&A session. Thank you all for participating. And for other questions unanswered, we will give you an answer after this event. If you have more questions, you can contact our IR team. Well, that's the end of the event. Thank you very much for your time.