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

Good afternoon, ladies and gentlemen.

Welcome to CPIC 2023 Results Announcement Event. I'm Suzhou Jun, CPIC Group Board Secretary. This time the event is held in both Shanghai and Guangzhou. We're going to give you an introduction of our results last year and also listen to your suggestions and ideas to enhance The rights of small and medium-sized investors, we are also broadcasting this event online, and also you can check our website to play back this event afterwards. First of all, I will introduce the executives we have on the Shanghai side, Mr. Fu Fan, CPIC Group Board Chairman, and Ms. Pan Yang Hong, Chairman of CPIC Life. and Mr. Yu Bin, CPIC Group Deputy General Manager, and Mr. Zhang Yuanhan, Chief Actuary and CFO of CPIC Group. And also on the Guangzhou side, Ms. Zhao Yonggang, CPIC Group President, and Mr. Gu Yue, CPIC PNC Chairman, and Mr. Ma Xin, CPIC Group Deputy Vice President, and Mr. Su Gang, CIO of CPIC Group. And our independent directors will also attend this event online. First of all, our President, Ms. Zhao Yonggang, will give you a presentation on our performance last year to be followed by a Q&A session. Now I'll give the floor to Mr. Zhao. Good afternoon, ladies and gentlemen. I'm Zhao Yonggang, President of CPIC Group. Welcome to our annual results announcement for 2023. It's my great pleasure to meet you face to face. And last year, China's economy recovered and stayed on track. Given this kind of economic uncertainty and situation, I would say China's economy has potential and resilience with increasing positive outlook in the long run. In the meantime, the reform of China's financial regulatory system supports the return of the industry's value proposition to protection and also helps to prevent and mitigate major risks and helps the industry's healthy development. Given these challenges and opportunities, we adhere to high-quality development, deepen our transformation, and delivered a stable performance with increased market share and steady progress in value creating. We also have a more solid foundation for sustainable development. We stay committed to serving our customer needs, forge ahead in pioneering spirit with greater resilience for development and a more assuring outlook for long-term growth. In terms of the numbers, group insurance revenue amounted to $266 billion, a year-on-year growth of 6.6. Group OPTA, attributable to shareholders of the parent company, was $35.5 billion, down by 0.4%. Group net profit fell by 27.1% to $27.3 billion. And group EV was... 529 billion, up 1.9%. And our group AUM was 2.92 trillion, up 10.1%. And adopting the new accounting standards and reporting financial instrument standards, certain metrics have changed differently under the new standards. According to the new requirements, the company adjusted comparable figures of the previous period, which related to Xinshuan's business. And according to these standards, the company did not adjust comparative figures of the prior period, which related to investment business. The company maintained solid capital positions with group comprehensive and core solvency margin ratios On the third of two at 257% and 171% respectively. Last year, our CPIC live completed the insurance of perpetual capital bonds phase one. And based on our capital planning, we will ensure an appropriate cushion for capital to withstand the shocks and the systematic risks. Under the new accounting standards, net profit is more impacted to capital market movement, and therefore more volatile. OPTA is more comparable with the long-term nature of our business. Our group OPAT amounted to $35.5 billion, down 0.4%, and of this, that of CPIC Life was 8%. 27.3% up by 0.4%. Group EV was still stable, growing by 1.9%. And the group adjusted net worth amounted to 291.5 billion, down by 2.2%. Group value of enforced business was up by 7.4%. In terms of the drivers of the EV movement and of the positive contribution many come from expected return on EV and MBV, EV movement was also impacted by changes in methodology, assumptions, and models. Investment experienced variance and shareholder dividends. In terms of China's health management, we offer this kind of customized program And also upgraded Lanyi Bao And they built a tax-deferred online medical insurance product for whole life And we also launched Jia Anxin, a medical insurance product for substandard risks to cover both healthy people and also those with five types of chronic disease. For services, we supported elderly care based on customer segmentation. By the end of last year, eight CPIC home retirement communities opened for business. including those in Hangzhou and Shanghai. We also debuted Bai Sui Ju, a one-stop integrated smart solution for home-based old-age nursing so as to improve our services to the elderly. And we also have upgraded You Guan Jia and the CPIC Blue Passport. And we collaborated with Rui Jing and other famous hospitals for the supply of diversified and high-quality medical care products. In terms of our people, we joined hands with Rijin Hospital to enhance the professionalism of our agents, and we also improved customer experience via CPIC Blue, and some other charitable foundations to better serve national initiatives and also focus on the Yangtze River Delta, Greater Bay Area, and the region of Beijing. We have different focuses for different regions. For the Yangtze River Delta region, we consolidated regional advantages. For Greater Bay Area, We developed cross-border businesses for the region of Beijing and Tianjin. We expanded headquarter economy so as to develop the brand of CPIC. In 2023, the insurance business in the four key areas or regions have accounted for a considerable part of our overall business. And we also We have lots of innovation in product, in collaboration. As you can see on the slides, what we are doing in terms of innovation. Now the four key regions have become a source of innovation for high quality growth of CPIC. We continue to implement the strategy in digital empowerment to enhance our high quality growth. We established our group centralized data governance system. We have a structure called three data centers in two places to achieve a cloud computing capacity to support responses within seconds to hundreds of millions of users and real-time computing of all data. CPICPNC established a integrated disaster migration and response system to improve information transparency, prompt rescue efforts, and accuracy of claims payment. CPIC Live launched Xin Shuang Lu, meaning new model of double recording to enable cloud-based meeting of sales agents and customers. In terms of digital management, We completed carbon footprint verification of the entire company for the first time and established a visualized platform for footprint management on the operational side. Digital employee was also up and running in our internal audit center. We persisted in customer orientation, deepened the CPIC service, continued to enhance supply of services, And diversify the ecosystem of intra-group collaboration so as to improve customer value contribution. By the end of last year, the number of group customers, the number of individual customers with two or more insurance policies, and the number of individual customers with insurance policies of multiple subsidiaries, the number of long-term life insurance customers with annualized premium of 15,000 or more and the number of customers was SA of 1 million and above on TPL of auto insurance all increased year on year. And also the share of strategic accounts in agreement with multiple subsidiaries reached 61.4%. CPIC PNC and CPIC LIFE maintain high ranking at regulatory evaluation of consumer rights protection. We are committed to generating long-term stable return for our shareholders. Last year, we had a slight decline for net profit attributable to parent, but we maintained a DPS of 1.01 yuan to our shareholders. Since our listing, we have paid out a total of 108.8 billion yuan in cash dividend to shareholders, to investors. Going forward, we will maintain a prudent dividend level based on OPAT and also considering factors like capital constraints, need of a sustainable development, and reasonable return to shareholders. Well, next, I'll walk you through our core business segments. In terms of live business, we continue to deepen Changhang Action Transformation and achieve the balance business development with steady growth in our premium income and robust MBV performance. Last year, the total Written premium amounted to 252.8 billion, up 3.2%, and FYP grew by 3.7%. Renewed premium grew by 3.0%. MBV reached 10.9 billion, up 19.1%, and the MBV margin stood at 13.3%, up 1.7 percentage points. 13-month persistency ratio improved by 7.7 PT to 95.7%, and the 25-month persistency ratio reached 84.0%. In terms of our agency channel, we continued with efforts on three directions and the five mosts to steadily Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma to drive growth of core manpower. In terms of professionalism, we rolled out online and offline integration differentiated CRM system. And we used various training camps to improve value proposition on wealth management, retirement, and health protection. In terms of digitalization, We redeployed digital blueprint based on the needs of employee, agents, and customers. Last year, we can see improvement in monthly average FYP per agent and monthly average performance ratio. To be specific, our monthly FYP per core agent was up by 26.6% 43,503 yuan. And the monthly average FYC per core agent rose by 46.3%. On the bank side, the total return premium was 38.06 billion, up by 12.5%. And the MBV, or Regular pay and the new business premium was $9.02 billion, up by 170%. The MBV was $1.8 billion, up by more than 115%. Its share of MBV rose by 7.6% to 16.9%. In terms of P&C business, We promoted sustainable development and established an integrated system to cover prevention, reduction, relief, and claims payment. Our auto and non-auto business grew steadily. And we also maintained profitable, sustainable, high-quality growth. For the whole year of last year, Our recorded primary premium income was 188 billion, up by 11.4%. Of that, auto business accounted for 103 billion, up by 5.6%. Non-auto business grew by 19.3% to 84.8 billion yuan. And our combined ratio was 19.3%. and many more. For auto business, we maintained our fundamentals to enhance CRM and channel efficiency. The combined ratio of our auto business was 97.6%, up by 1.1 PT from a low base in 2022. The loss ratio stood at 70.6%, up by 1.1 PT, and the expense ratio was 27%, same as the previous year. In the same time, our renewal ratio rose by 1.6 PT to 75.4%, and the share of NEV reached 12%, up by 3.7 PTs. For non-auto business, we followed the national initiatives to focus on key areas and accelerated innovation, continue to enhance the IM, and also enhance our quality control. The combined ratio was 97.7% for non-auto business, same as 2022. Health insurance deepened deployment in various businesses and the innovative product supply and also stepped up the development of mid- and high-end commercial health insurance. Last year, it reported 17% Weidong Zhang 28.8%. Liability insurance, well, we offer the specialized customized insurance products in terms of workplace safety, environment protection, etc. Last year, its primary premium income was $19.6 billion, up by 31.4%. For commercial property insurance, last year it generated 6.81 billion in primary premium income, up by 7.5%. For the asset management side, our group AOM maintained a steady growth. By the end of last year, it was 2.92 trillion, up by 10.1%. and the group in-house investment assets amounted to 2.25 trillion, up by 15%. Third-party AOM was 672.2 billion, down by 3.7%. We continue to improve allocation into long-term T-bonds to extend duration of fixed income assets and we also improve Our investment in equity assets and alternative assets, including private equity, to enhance long-term return. Also, we continue to control credit risk. SAA continued to improve. By the end of last year, the share of debt financial assets was 74.5%, and equity assets accounted for 14.5%. Down by 0.3 PT. And of that, stocks and equity funds accounted for 10.7%, down by 0.8 PT. In terms of TAA, we maintain the flexibility so as to capitalize on equity market volatility and the secular decline of interest rates. Last year, net investment income totaled 77.7 billion, up by 2.3%, and net investment yield was 4.0%, down by 0.3 PTs. Total investment income was 52.7 billion, down by 28.3% year-on-year. That is mainly because of the ADOPTION OF NEW ACCOUNTING STANDARDS SECURITIES TRADING LOSSES AND INCREASE IN LOSSES FROM FAIR VALUE CHANGE AND COMPREHENSIVE INVESTMENT YIELD ROSE BY 0.4 PTC ON YEAR TO 2.7% MAINLY BECAUSE OF INCREASED IMPACT FROM EQUITY FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME. We pay great attention to credit risk management to proactively manage and mitigate the risks. 99.1% of corporate bonds and financial bonds issued by non-government-sponsored banks had an issuer death rating of AA or above. Of this, share of AAA reached 96.5%, and of non-public financing instrument with an external credit rating The share of AA plus and above reached 99.6% and that of AAA was 97.6%. NPFIS were either exempt from debt issuer external credit ratings or secured with credit enhancing measures such as guarantee or pledge of collateral. The underlying projects of our non-public financing instruments spread across sectors like infrastructure, real estate, With a blended nominal yield of 4.7% and an average duration of 7.8 years, last year, there were both challenges and opportunities for China and the world. In the long term and medium term, rising income will boast to consumer confidence, and this will in turn improve insurance demand. Reform and innovation will sustain long-term industry development. The five priorities of financial services, namely technology, green transition, inclusive finance, elderly care provision, digitalization, and holistic financial regulation underpinned by supervision of institutions, all these will help long-term healthy development of China's insurance market. We will stay committed to the vision of being the best in customer experience, business quality, and risk control capabilities. We will continue to strive for leadership in healthy and steady development of insurance industry. We will press ahead with high-quality development, seek progress while ensuring stable fundamentals, deepen the three key strategies, i.e., health care, elderly care, and business development in key regions, so as to ensure prevention of major risks to enhance resilience for sustainable development. Well, thank you. Thank you, Mr. Zhao, for your presentation. Now we will enter the Q&A session. Now, first of all, we will first ask any questions from the Shanghai and Guangzhou side. And also, if you have any questions online, you can also prepare them. But if you want to ask questions, please ask no more than two questions. Well, first of all, a question from the Shanghai side. Now, please pass on the microphone, please. Oh, thank you. A question from the Shanghai Security newspaper. Well, you see the industry is in a period of a transition, but what is your view on your future high-quality growth strategy? Thank you. You see... We are undergoing a lot of changes, and the industry is also facing a lot of changes in the environment. You see, the international environment is quite complicated, and we see a very slow momentum for global economic growth. However, we do see opportunities brought by the green revolution, the AI revolution, etc. Internally, we do have a slow or low demand, We have weak expectations, but we also see good news from these high-level events, for example, the China Development High-Level Forum, etc. For this year, 2024, the Chinese economy is expected to grow by 5%, and we are going to open more to the outside world. I believe all these will inject new energy to China's economic growth. Based on that, we are going to seize the opportunities for high-quality growth. But of course, we have better understanding based on the experience in the past few years. First of all, high-quality growth should serve the national strategy, should serve the real economy. The Chinese people have a very high expectation for a high-quality lifestyle. So we need to enhance our provision of services and insurance products. So we need to serve people's requirements and needs. We also need to serve the national strategy. It's part of our responsibility. We should actually serve as an economic stabilizer and a shock absorber Secondly, I believe high-quality growth should focus on quality. We should put quality first because customer demand is changing. So we cannot rely on this kind of extensive growth model with high input, high cost, and high consumption. We should focus on quality and efficiency. Try to strike a balance between quality and volume. We should focus on Refined, sophisticated management focus more on innovation and transformation and reform. Thirdly, high-quality growth should be based on consolidation of our market position. We should balance the growth of enforced business and new business. We should maintain our fundamentals. should focus on stability while focusing on transformation. And I believe high-quality growth should also focus a lot on risk management. We are a risk manager as an insurer, so we should serve the customers but also country and the society on the large. We ourselves could not create risks. We should manage risks. We should be forward-looking, focus on the three lines of defense, and also strike a balance between innovation and compliance. And lastly, I believe high-quality growth should be sustainable. Now, sustainable means that we should have the right strategy. We should have the right resilience. Given this kind of changing situation, Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma to develop our own competitive strengths so as to better empower our insurance business. In terms of our strategy for key regions, we should increase our efforts in terms of customer development, product R&D, and resource mobilization so as to enhance our competitiveness In terms of the big data strategy, we should also enhance our efficiency to serve the front line, to release the value of data. The new board will continue with our focus on long-termism, on value proposition, on our professional diversified development. We will try to sit upon China's national strategy on financial industry to enhance our capabilities. And on the other hand, we need to focus on managing the key major risks to reinforce our development fundamentals. We have been in the business for a long time with a lot of professional people and resources working for us. We believe with transformation, We will generate new achievements for the customer, for shareholder, for the society, and all relevant stakeholders. Thank you. Thank you, Mr. Fu, for your answer. Now let's turn our attention to the Shanghai side for more questions. Thank you. I'm Mao Jingqing from CICC. My first question is, It's more like a follow-up question on the previous question. You see, the CPIC Life's Changhang Transformation Plan, we see you've achieved a lot of good results from the Changhang Action Plan, but we do see some changes in the group top management. Does it mean the Changhang Transformation will also change accordingly? And a second question for PNC company. First of all, congratulations. You did quite a good job in last year. And what about 2024? What's your plan? What's your targets? What's your strategy? And what about the slit in Q1? Any big impact from that? And also about the new trends of reducing new energy car auto premiums. Is there any impact from that? Oh, thank you. Now, first of all, for the live question. Well, actually, you see the Changhang Transformation started from 2022. Now, this is the third year of the Changhang Transformation. I believe the transformation, well, is producing results Now, the Changhang Transformation, what we call phase one, now focus mainly on the new business model. What I call new is not only, well, brand new, but also focusing on the people. In Chinese, xing means heart, and also new, so it's not only new, but also people-focused. Well, secondly, It focused on the bank channel. And lastly, it's upgrading to focusing on the golden triangle of health, wealth management, and retirement care. Now we see MBV was started to pick up in the second half of 2022 and then maintained quite fast growth onwards And in terms of our core agents, they increased in terms of income and also productivity. And also our quality of business increased quite a lot in terms of claims, etc. In terms of OPAT, it maintained steady at high levels. And in terms of our evaluation assessment rating from the regulators, we are also industry leading. In 2023, in the second half of that year, we actually launched, well, actually a big organizational adjustment or restructure. We made a lot of streamlining made a lot of adjustment. So we see a much more improved efficiency for organizations. And we also launched the Changhang Transformation Phase 2. Now in Phase 2, you will be more customer focused. Now the second phase mainly focus on three The key areas, first of all, we are focused on developing diversified channel. We need to build a new engine for business. For the agency channel, you will focus more on the team development, on improving the quality, the capability of people. And for bank insurance and for the group business, they will also focus more on value growth. Secondly, it's about the customer, the mid office for customer business, customer development. So we need to actually integrate both the customer and our services so that we can better serve their needs. And lastly, it's about the value management. We need to further boost the efficiency and the dynamism of our organization. We need to become more market-oriented. We need to focus more on the long term and put people first so as to better develop our people and I believe during all that we will better motivate all our SSCs, all our outlets at all levels so that all our outlets, all our high performers will be on the same page as to what to do I believe all that is going smoothly and we are getting more consensus from the front line. And by the way, I have been with CPIC for more than 30 years. My personal impression is that for those many years, we have a very good tradition. We have a very stable strategy for our business growth And also for the company as a whole, the Changhang Transformation, I believe, is well received. We are on the same page about the transformation. We believe we will continue with the transformation. We will be more resolute on transformation. We will actually be more focused, be more pragmatic. Be more practical, so I believe we will see better results going forward. Thank you for the question. Now for the question on the PNC side. Before we look on the 2024 picture, we should look back on 2023. You see, the last few years, P&C Company continues to pursue a strategy for growth. First of all, we look at the market conditions and the market changes So as to adjust our own strategy. For example, nine years ago, we started to develop agricultural insurance. At that time, we only have a 6% or 7% market share at less than $1 billion premium. But in the last nine years, we see very fast and stable growth of agricultural business. Take last year, for example, our agriculture insurance grew by more than 28%, which is 11 percentage point higher than the industry average. Last year, our premium for agricultural insurance is 1%. 17.7 billion. So you see that that's a very good example of our strategy positioning. And also on the liability insurance business also grew fast for many years in a row. For example, for 2023 The growth was more than 30%. Total volume was close to 20 billion. Now number two for our P&C business. Agriculture business, agriculture insurance was number three. So we need to maintain long-term growth for these insurance businesses. And secondly, given the occurrence of natural disasters, we also developed a system to prevent, reduce these disasters. But as a general public, we will feel there's a lot of disasters. For example, last year, in July last year, We see a lot of typhoon, and in August we see a lot of rainstorm, and then in September we had another typhoon in Zhejiang province, and also we had some earthquakes. For last year, catastrophe loss. After reinsurance, I mean, I counted more than 2% of our earned premiums. Previously, the share is less than 1.5%. So, as you just mentioned, this lead in January actually caused a lot of damages, a lot of losses, above 500 million yuan in just 10 days. So what you see, bad news, really bad news. So given this kind of high occurrence of disasters, we paid a lot of attention to disaster prevention and the disaster alert system. As Mr. Zhang mentioned, we have a system to both prevent and also reduce disasters, reduce the losses caused by disasters. And by all doing that, we also put ourselves in a better position with our customers, and we increase the experience of our customers. And thirdly, We also improved our system to serve the customers. You see, given the bigger size of our business, it's harder to serve the customer. We need to serve some of our customers with good quality service and also expand our business. So this is a high order. So we need to have a good system to support that. We actually spend a lot of energy on that. We utilized digitalization to leverage tools. We actually deployed robot technology to do that. So we use a lot of robots to actually do this kind of hard work, dirty work. And robots also have advantages over human. They actually, they are error free. They will not get tired. They don't need the lights to operate. They can operate in the darkness, et cetera. I mean, by using robot technology, I believe on average they actually replaced around 600 to 800 of our people. So that saves a lot of manpower. So we are now operating at a higher efficiency, at a better quality, and even at lower costs. So this supports our high quality growth. And fourthly, we also focus on quality control. Because customers, they are having diversified needs. We are having more diversified customers. So we need to have different products, various products to serve different people As you know, sometimes insurance companies have low efficiency because they have too many products to maintain and too many customers to serve. So that is why we are doing this kind of integrated sales system. We offer them a kind of integrated solution. I can give you some numbers on that. And also, in terms of serving our individual auto customers, we also used our digital system to generate productivity growth. And in terms of cross-selling between auto and non-auto insurance, in 2023, cross-selling grew by 40%. Last year, cross-selling amounted to more than 15 billion yuan. Now this not only brings more premium to CPIC, but also better served our customers. And of course, we also remain compliance-minded. So we will never waver in terms of compliance. For example, we have a system called the Heaven Eye System. That is to say, that system can automatically check against fraud, etc., So with the SkyEye system, actually it, well, identified the fraud cases exceeding 80 million yuan in volume. Well, that's my answers to your question. Now, for myself, last year, CPS, APNC has delivered a solid performance meeting our expectations. And it also means that transformation is producing results over the last few years. Before 2018, CPI-CPNC lags behind our main peers. But starting from 2018, CPI-CPNC started to improve. Starting from 2018 to this year, we not only leased the industry, but also performed better than our main peers. In 2023, we actually grew 4% faster than the industry and more than 5% faster than our major peers. Take combined ratio as an example. In 2018, we started to lead the industry in terms of combined ratio starting from 2018. Last year, in terms of combined ratio, Our combined ratio was two percentage points better than the industry. In 2021, 2020, 2020, and starting from 2022, Our growth is 1.3 percentage points better than our major peers. Now all this shows that our transformation is on the right track. It is a correct decision, but it needs time. It needs persistency. Now in terms of forecast for 2024, now I don't want to comment on the general economy, but I would say 2024 is a year with a lot of complexity and uncertainty for P&C business. The overall demand is going down and the risk exposure is expanding So that is to say, we need to have a more urgent sense of crisis or emergency. And also, we see there's upgrading of industry, consumption upgrading, and also there is the green revolution. All these will bring opportunities. So we need to be more agile, more sensitive. But of course, We need to pay more attention to the occurrence of catastrophes and natural disasters. So if you want my forecast for 2024, I can't give you an answer, but I just want to add My personal guess, I would say we need to be prepared for any opportunities. And secondly, if you can stick to the end, probably you will not end up too badly. Now, your second part of the question is about the new energy vehicle, new energy car. Actually, three years ago, we have made a judgment call saying that new energy car will become the thing in the future. It will become very popular. Three years ago, we actually started a project on the new energy vehicle, NEV, We believe it will grow very fast, at least in China. We will bring a new business model. So, thanks to the efforts in the last three years, we started to see some results in 2022 from some of our projects. We believe the new business model for NEV is focused on sales side and service side. You see, new energy car, new energy vehicle is costly. It's popular, it's a smart, intelligent car. And the structure of the car, of the new energy vehicle is different from traditional vehicle. And the driving habits is also somehow different from traditional cars. So, well, in China, a lot of the new energy vehicle were used as taxis. So in terms of claims payout for an EV, I mean, the incident rate is doubled that of a traditional car. But CPIC, PNC as a leader in the market. We should be prepared and embrace the challenges of NEV. Now, so far, I would say we have already achieved some initial results. The growth is very fast for NEV. Last year, it grew by 50%. And the share of NEV In CPIC is around one to two percentage point higher than the peers, than the industry. Now, of course, now NEV business is still loss-making, but starting from last year, the loss is diminishing. So we have high expectations for the NEV business. We are seeing some ray of hope. And also, as far as we know, the regulators in China, they are going to formulate some new rules to support the growth of NEVs in China. So as a giant PNC company, We should, well, take the first mover advantage so as to serve the overall growth of the industry. Well, thank you very much for the detailed answer. Now let's move on to the next question. Thank you. I'm from Guotai Dreamland Securities. I have the questions. about the new management and the product side. For example, the incremental whole of life products. Now, in terms of liability, what is the cost of your liability for your business and the enforced business and how can you guard against the spread risk Second question, given the downward trend of interest rate, so how about, what is your SAA? Any changes there? And what about your, well, the gap, duration gap between assets and liabilities? Now I will first answer your question. Now we saw a lot of incremental whole of life. The liability cost increased very slightly, maybe just a few BPs. Now with market changes in terms of interest rate going down, so the overall cost is going down. Secondly, in terms of the new business selection, Looking at the Chinese market in the new environment. Now, customers have more requirements or new requirements for products. We will first of all reduce our pricing rates and enhance the variable parts in our products. And thirdly, we will increase the share of our protection part so that it will become less sensitive to interest rate. And what's more, we are having new rules, regulatory rules on commissions. We believe these new rules will help us better manage our costs. So with downward interest rate in China, we believe the whole industry is having the same problem. They will have lower reduced Thank you very much. Thank you. Well, the insurance industry is facing a lot of challenges and pressures. If you take the issue, I mean, if you look at it only in a silo perspective, if you isolate the issue, you only see a challenge. But if you put it into perspective, you will see more opportunities. For example, in terms of matching liability with assets, How can you make it more sustainable for the long term? CPIC, our SAA and asset liability matching, well, on both sides, we focus on the dumbbell model, and we're not saying that we want dumbbell model, with sophisticated TAA. What do I mean by that? That is to say, first of all, we need to become more professional every step of the way. For example, you know, for insurance investment, we should start with liability, and then we should have SAA, and then we should have our yearly allocation And then we can have the TAA, and then we do mandates, investment mandates, and then do day-to-day management. So this is a really very long chain of management. How can we better manage our investment so that the group, the investment managers, asset managers can both win? I believe it depends on the efforts, the professionalism of everyone along that chain of investment. Secondly, in terms of SAA, we should make it more sophisticated. So that it will become more targeted. We will have more targeted investment measures. For example, fixed income, SAA. Last year, in the past, we tried to improve our allocation into long-term bonds, super long-term bonds. We do that in order to prolong our Asset duration. At the same time, we are reducing the share of our credit products. And by that, we actually avoided some of the credit risk events on the market. And we also just got the ABS qualification so that we can explore new ways to allocate in innovative fixed income asset products. And for our dividend payout, given the new accounting standards, we are trying to invest in high dividend payout stocks so that our portfolio as a whole will produce more stable return. So actually we've got a lot of dividend payout from this kind of high pay in stocks. I mean it grew by more than 40%. So that is why our net investment yield maintained quite stable or more stable compared to peers. Now we are trying to improve our asset, our investment in equity and also enhancing management post-investment. But of course, China insurers need to Make more exploration. We need more diversified investment. For example, global asset allocation. And also, we will bring ESG into our investment process. And also, the investment process need to be Managed in a sophisticated way. Now you see our investment process is a year-long process. For example, setting up the targets and then break it down and then supervision of major investment projects. Each week we will conduct a meeting on market research. Each quarter We will have a meeting between internal and external experts so as to review our investment strategy, and we will conduct ad hoc seminars on specific themes. So we believe these will help to improve the stability of our yields. But of course, all that, well, We need to ask ourselves how to better manage assets and liabilities. It's not only interest rate spread risk. We need to also care about the duration gap, the matching between input and output, income and cost. In the last five years, our share of T-bonds The share of our high-paying, high-dividend-paying stocks is also quite reasonable. We also have a category for the high-dividend-paying stocks. As long as we stick with long-term value prudent investment and responsible investment, we believe we can achieve SAA that is counter-cyclical. Well, thank you. Thank you for the answers. We talked about the S&I ability and also we talked about our strategy Investment Strategy. Where is this sophisticated investment system? Now let's move on to the Guangzhou side. Thank you for your presentation. I'm sent in from Haitong Securities. Now I have two questions. Last year, you delivered solid performance, better than peers. Now for 2024, what's your take for this year? How can you serve or continue with your high quality growth? Can you give me more details? The second question is about the dividend payout policy. Now, OPAT is going down, but your dividend payout is stable. So my question is that what's your guidance on that? How are you going to link your dividend payout to OPAT? Thank you. Now, first question. 2024, that is a very critical year for the 14th Five-Year Plan. We're going to stick with our CPIC way of high-quality growth. Mr. Fu has given you a lot of details on high-quality growth. I will focus on the specific businesses. I would say, first of all, in terms of our insurance business, we should stick to the Fundamentals of our insurance business. Now, as we mentioned, we should focus on value proposition, to focus on the transformation, to have differentiated customer development, to focus on wealth management, retirement, health, business development. Also, to enhance our efforts in terms of recruitment and core agent training. For bank channel, we should continue to focus on the value and the volume. For P&C business, we should focus on quality. And for auto business, We should focus on acquiring new customers and to maintain high-quality customers. For non-auto business, we should focus on the quality improvement of health insurance, liability insurance. Also, we need to enhance our capability in terms of risk identification in new areas to enhance capability to reduce risks and on the asset management side, we will continue with our prudent investment strategy to enhance research on macro and markets trends and continue to develop our SAA and strategies that is counter-cyclical Secondly, we need to focus on the strategic opportunities and focus on innovation. As we mentioned, we are focused on health-related business. Now, for health business, we will use health-related services to empower our insurance business. We need to also improve our Provision of products and enhance the growth of our health business and also improve the services of health-related business and also better utilize the value of our health-related data in terms of key regions, development, We should better empower the frontlines focusing on the key regions, especially the mid- and high-end customers in those regions. We should focus on the synergy of life and P&C business to enhance cross-selling. In terms of big data, we should increase our efficiency to better develop our ecosystem to empower our insurance business and accelerate the application of AI technology and better enhance data management capability so as to enhance efficiency and reduce costs. Lastly, in terms of corporate governance, we should continue to enhance our efficiency, improve our governance so that we will have a better execution across the group. And we should also improve our capital management mechanism. And also we should focus on external Thank you very much. Thank you very much. World Class Financial Services Group. We should continue to enhance our comprehensive capability so as to better serve the real economy and the society and also all our customers. Thank you. Okay, for your second question, you mentioned Mr. Zhao actually mentioned We will actually take OPAT as a reference. In the next two years, we believe OPAT will grow slightly. We pay a lot of attention to return to the customers. And actually, our accumulated cash dividend payout is 108 billion. And since the adoption of Solvency II, We slightly reduced our dividend payout. And in the last two years, we maintained a steady level of dividend payout. We believe this will not affect our business fundamentals. We will continue to maintain the consistency and stability of our dividend payout. Thank you. More questions from Guangzhou. Thank you. I'm Ge Yuxiang from Dongwu Securities. Two questions from me. First of all, on the health business, what's your comment on that? And also, how does that relate to your business, insurance business? Second question about the accounting, new accounting standards. Now, MBV on page six, I believe, may regress to the net profit, but OPAT, it was actually down, was adjusted downwards. So in terms of a regression,

What's the reason behind that?