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

Good afternoon, ladies and gentlemen. Welcome to the CPIC 2024 Interim Results Announcement. I'm Su Shaojun, Board Secretary of CPIC Group. It's my great pleasure to have this opportunity to give you a brief overview of our performance in the first half of 2024. In order to extend the coverage of this results announcement, we are conducting this event Both online and offline. And of course, you can review our playback video on our official website. First of all, allow me to introduce our guest of honor, Mr. Fu Fan, Group Chairman, and Mr. Zhao Yonggang, Group President, and Mr. Zhang Yuanhan, Group CFO and Chief Actuary, and Mr. Su Gang, Group And our independent director will also attend this meeting and also some of our senior executives will attend this meeting as a non-voting member. First of all, I'll give the floor to Mr. Zhao to give us an overview of our H1 performance. Good afternoon, ladies and gentlemen. I'm Zhao Yonggang, president of CPIC Group. It's my great pleasure to have this opportunity to meet you face-to-face and online. We see in the first half of 2024, China's economy had a positive momentum of recovery, and also we see the improvement of resilience and sustainability. For the insurance market, we see an upgrade in customer needs, and the industry are having important opportunity to serve China's drive for modernization. Given this kind of challenges and opportunities, we stayed focused on insurance and persisted in value growth and long-term resume and deepened our transportation and delivered the solid business results with secure market standing and increased competitiveness. In terms of our business numbers, group operating amounted to 194.6 billion, up 10.9 percent. Group insurance revenue was 137 billion, up 2.2 percent. Our group OPAT was 19.7 billion, up 3.3 percent. And our net profit was 25.1 billion, up 37.1%, and EV grew 7.4%, and the number of customers reached 181 million, and our AUM increased 11% to 3.3 trillion. We maintain the solid capital positions on the 0 of 2, our comprehensive and the core solvency margin were 251% and 173%. And our comprehensive and core solvency margin ratios were above regulatory minimum levels. CPIC Live successfully completed the issuance of the second phase of perpetual capital bond. Going forward, we will maintain a reasonable level of capital quotient Thank you very much. and the material one-off factors. Our group OPAT grew 3.3% year-on-year to 19.7 billion. Of this, CPNC Live achieved 15.2 billion, up 1.8%. Our group EV grew by 7.4% from the end of 2023. If we look at the composition, the net Adjusted net worth amounted to $320 billion, up 10.1%, and the group value of in-force business was up by 4.2% to $247 billion. Look at the EV movement. Positive contributions mainly come from expected returns on EV and MBV. Also, EV movement We are customer-oriented. We pursue transformation and innovation to foster drivers of high-quality development. In terms of healthcare strategy, we respond to customer needs and change in behaviors. We launched Ai Xin Bao, a CI product. And also launched Xin Fu Nian Nian, an integrated elderly care solution. And our CPIC family doctor rolled out 48 experience centers of Bai Sui Ju to innovate a new mode of smart service and diversify the product service offering. In terms of regional development, we focus on key industries and products to expand the service ecosystem for high net wealth customers and developed a differentiated product solution, enhanced cooperation with strategy to build models for the BBE business. In big data, we increased the use of new technology, stepped up digital intelligent business management, and putting place group-wise data governance system promoted the development of large models for insurance. And our digital labor for internal audit performed over 2,000 tasks per month. In brief, our overall business results continue to improve in the first half of 2024. We are also We are advancing ESG agenda. For example, we see breakthroughs in green insurance, green investment and operation. Our visibility of our ESG brand is improving. We also continue to enhance management mechanism. Our CPIC PNC and CPIC Life maintain industry leadership in summer assessment and also customer This laid a solid foundation for our healthy and long-term growth. Next, let me walk you through the performance of our core business segments. Looking at the life business, we deepened the Changhang transformation to step up the pace of reform and achieve the rapid MBV growth and further consolidated the foundation of our value growth. To be specific, our written premium reached 170 billion, up 0.3%, MBV reached 9 billion, up 22.8%, and MB margin was 18.7%, up by 5.3 percentage points. Our 13-month persistency ratio improved to 96.9%, while 25-month ratio rose by 7.6% to 91.7%. The agency channel will continue with the three directions and the five most strategy. In terms of career development, we continue to leverage the basic law to roll out our normalized recruitment. And in terms of professionalism, we continue to meet needs for health protection, pension, wealth inheritance, et cetera, to improve skills for selling autism products. And we focus on scenarios of CRM and team management to standardize modes of agents activity management. Our regular pay new business amounted to 18.2 billion by 3.9%. Our core manpower began to stabilize and recover with a monthly number of 60,000 each month. up by 0.8%. Monthly average FYP per core agent exceeded 60,000, up by 10.6%, and the monthly average FYC per core agent surpassed 8,000. For BinBank's business, we focused on strategy, strategic partnership, optimized staffing of bank outlets, and empowered Precise business operations. On the whole, our new business growth for bank came under pressure, but the value maintained a steady growth. Specifically, the bank channel achieved 21.9 billion, down by 1%. Our MBV grew by 26% to 1.75 billion. and MBV Margin also grew by 5.6 PT to 12.5%. In P&C, we accelerated deployment in technology finance, green finance, inclusive finance, digital finance, etc. And we see improved underwriting profitability and a steady rapid premium growth To be specific, our primary premium income reached $111.8 billion up by 6.8%, of which premium from auto insurance was $52.2 billion up by 2.8%, and non-auto was $59.6 billion up by 12.7%. Our underwriting combined ratio stood at 97.1% down by 0.8 PT, and the loss ratio was 69.6% down by 0.8 PT. For auto business, we continue to optimize business mix, strengthen centralized resource allocation, And our underwriting combined ratio of auto insurance was 97.1% down by 0.9 PT. And underwriting loss ratio stood at 71.4% up by 0.6 PT. And underwriting expense ratio was 25.7% down by 1.5 PT. The policy renewal ratio for individual customers reached 76% up by 1.1 PD and the share of premium from new energy vehicle also rose by 3.6% to 14.1% in terms of market share. For non-auto business, we continue to be committed to China's national initiatives. Our combined ratio was 97.2% down by 0.6 PT. For health insurance, we continue to develop traditional business such as terminal illness, personal accident medical insurance. with also innovative product offerings. Its primary premium income in the first half of this year was $16.1 billion, up by 21%. For agricultural insurance, we improved its coverage and protection with innovation so as to serve these kind of big agricultural players and met their diversified needs. For the number, we've delivered $13.6 billion in the first half of this year, up by 9.8%. For liability insurance, we focused on workplace safety, environment protection, food safety, etc., And also cyber security. In the first half of this year, its primary premium reached $12.5 billion, up by 11.8%. Commercial property insurance continues to consolidate our leadership in business, and we strive to acquire customers from emerging sectors and high-quality micro and small businesses. For the first half of this year, we generated $4.5 billion in this sector, up by 22%. For our asset management business, we maintain the steady growth of Group AOM, which stood at $3.3 trillion at the end of June this year, up by 11.7% of this. Our group in-house investment amounted $2.5 trillion, up by 9.2%, and the third-party ALM reached $807 billion, up by 20%. We further improved the ALM Asset liability management system across economic cycles enhanced professional investment research and compliance and risk control and exercise the stringent control of credit risk to follow a dumbbell-shaped asset allocation strategy. We continue to increase allocation into long-term T-bond to extend the duration and also increase investment The equity assets and the alternative assets to enhance our long-term return. SAA remained stable at the end of June this year. Our share of debt financial assets was 73.8%, decrease of 0.7 PT, and the equity financial assets stood at 14.9% up by 0.4 PT. From the end of 2023, of this, stocks and equity amounted to 11.2% of total investment assets, up by 0.5%. We conducted disciplined TAA with flexibility to respond to the challenge of equity market, volatility, and the secular decline of interest rates. Our net investment income was $39.1 billion, up by 1.67%, which stemmed really mainly from increased dividend income. Our net investment yield reached 1.8%, down by 0.2 PT. Our total investment income was $56 billion, up by 46.5 years, 46.5% year-on-year, and comprehensive investment yield was 3%, up by 0.9% percentage point year-on-year, mainly because of the impact from fair value change of equity financial assets to other comprehensive income. We set great store by credit risk management to proactively manage and mitigate risks. For example, 98.8% of enterprise bonds and financial bonds issued by non-government-sponsored banks had an issuer debt rating of AA or above. Of this, AAA rating reached 96.6%, and the share of NPFIs with external credit rating reached 98.6%. Except for those issuers with high credit rating and therefore exempt from credit enhancing measures, other projects are secured with guarantee or pledge of collateral. Underlying projects of our non-public financing instruments spread across sectors like infrastructure, communication, etc., with a blended nominal yield of 4.5% and an average duration of 8 years. Looking ahead, the company will move toward the vision of a top-notch insurance group with global influence. We are going to pursue progress while ensuring stable business fundamentals. We are going to stay focused on insurance and continue to improve customer-oriented business operations. Press ahead with three key strategies in healthcare, regional development, and technology. and enhance professional capacity building to ensure prevention of major risks to cement the foundation and resilience of our development. That concludes my presentation. Thank you. Thank you, Mr. Zhao, for your presentation. Now let's enter the Q&A session. First of all, those on site will ask questions and we also welcome online questions. and audience to ask questions. Now, before you ask your question, could you please identify yourself and your employer and ask no more than two questions. Now, of course, if you are on site, you can just put up your hand to ask your question. We'll hand you the microphone. Thank you. I'm from the China Business News. We know that the Chinese People's Congress mentioned a policy to further promote China's modernization. So my question for you is that how are you responding to this kind of new policy push from the government and what are you going to do specifically to do that? Well, thank you. I would say for a long time, CPIC focused on We focus on stable and prudent business. We focus on insurance to push for sustainable value growth. And we focus on reform to improve our competitiveness. And of course, we see the China's People's Congress and Hapati's Congress actually gave us more opportunities and raised more requirements. For example, five key areas of the financial sector need to be further enhanced. We need to also serve the real economy and serve the people's well-being. I believe for the CPIC, we should do two things. First of all, we should continue to play up the key role of insurance. That is the shock absorber of the economy and the Stabilizing effect for the society. First of all, we need to serve the real economy and technology, high tech and the green finance, FinTech. So, for example, we need to help this kind of technology companies to give them more financing support. For example, our premium from these high tech industries reached $5 billion. for the first half of this year. And in terms of a green solution, we focused on green energy, green transportation, low carbon areas. We launched more than 30 products for these areas. Our premium from the green insurance reached more than $34 billion for the first half of this year. We look forward to give more support in this area so as to better serve the green finance, green economic development. Secondly, we need to make insurance affordable to be more inclusive. For example, our push to serve the elderly people, our retirement solution, elderly care solution, For example, you can see we have 15, already launched 15 CPIC care home communities across 13 cities with altogether 16,000 beds. And we also participate in terms of this kind of CI, inclusive CI, affordable CI and medical insurance for Chinese people. For example, for inclusive medical insurance for Shanghai, our combined claims payout for the past three years reached more than $1.7 billion. And we are also going to help the countryside economic recovery to cover, to benefit more farmers in terms of giving them agriculture insurance protection. On the other hand, we are going to improve our core competitiveness. For example, continue to boost our transformation. We moved from this kind of extensive growth to inclusive growth for agency channel. Previously, we focused on sales. Now, we are becoming more customer-oriented. And for eight Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao Thank you very much. Thank you. Reduced risks, reduced losses to further improve quality. In terms of investment, we are continue to see the big picture to continue to improve our ALM. We are going to have this kind of a cross-cycle ALM and build a risk-oriented Funding utilization or investment management mechanism. So we are becoming more long-term and become more prudent so as to have better long-term return from investment. In terms of digitalization, we are going to accelerate the development of new engine Bring technology closer to business with more integration so as to give more empowerment to customer development, risk management, claims, investment research, etc. For example, we will further deepen this kind of application for agent assistance, P&C BUSINESS CLAIMS CLAIMS OR UNDERWRITING ASSISTANCE, ET CETERA AND FOR OUR PEOPLE DEVELOPMENT WE'LL BECOME MORE MARKET ORIENTED MAKE MORE COMPETITIVENESS AND BETTER LINK OUR REMUNERATION WITH OUR PERFORMANCE BECOME MORE FLEXIBLE TO IMPROVE THE PROFESSIONALISM OF OUR PEOPLE and introduce more young talent, for example, in terms of this kind of training camp for young managers, intern, management trainee, etc., etc. Going forward, we will continue to serve the national strategy, focusing on these key national strategic areas to become more sophisticated in our management and make more prudent to become better at developing our quality growth. Thank you. Thank you for the answer. Now let's welcome the next question. Thank you, Mr. Fu. I'm Sun Ting from Haitong Securities. First of all, congratulations. That's a very good performance for the first half of this year. I have the question on The life side. Now, first, you see the Changhang Transformation Phase 2 was launched last July. So how do you see its effectiveness? And secondly, I see some personnel changes for CPSC Live. So what's your long-term view on the strategy going forward and on the targets? Second question is more on the actuary side. Now, actually, September 1st, starting from September 1st, pricing rate will change for live products. So how will it impact your product strategy? And also, you see, you spend a lot of time on developing par life. Your peers may have a 50% share of PACIFIC INSURANCE. Now, what's your stand? Or how is it in CPIC? Well, thank you. Maybe I answer your first question. Now, it should be said that to enhance our quality growth of our life business, we actually started... The Changhang Transformation in 2022 is mainly based on the new basic law for our agents to make them more professional. On the whole, I would say phase one of the Changhang Transformation is bearing fruit, is giving results. So we see improvement in terms of our core agents' number and their income and the quality of our team. And we see more contribution from bank insurance and worksite marketing and also improvement in business quality, persistency ratio, etc. Now, the second phase of the Changhang transformation started last July. Phase 1 is on top of Phase 2 is on top of Phase 1. Phase 2 focuses on channel diversification and also strong operational support and the closed loop of the strategic management so as to maximize our customer value, economic value, and social value. To be specific, on the diversification of our channel, we are going to do this kind of 1 plus X model with agency at the center and multiple other channels. For the agency channel, we are going to focus on coal, To improve productivity, to enhance team development, and also the team leader's capability For bank channel, we will persist with value orientation to build better model with the bank partners So as to make bank channel the second pillar for value growth of life insurance. And also, we are going to explore more ways to explore business. For example, work site marketing. For the operation support, we were going to We will better build our mid-office support for business and better manage our asset liability matching, our budgeting management, operation variance management, etc. And also we are going to leverage our technology to empower our business. and also we are going to focus on the customer centers agile operation and value creation to better boost our dynamism and in terms of the strategic management we're going to have this kind of a closed loop including strategic planning and resource allocation and the feedback feedback follow-up so that These kind of strategy will lead to more value creation. In terms of the targets, we are going to focus on EV, MBV, net profit, OPAT, these kind of economic targets, but also we'll focus on the trend of those targets, and more specific targets, for example, for the agent team, We are going to look at the number of growth, agent growth, but also production and sales mix, product mix, and the turning points. And for the bank channel, we'll look at the sustainability of the growth of the bank channel. So all these will point to the value of our growth. Of course, in due time, we are going to introduce MPS ESG indicators into our KPI systems so as to better reflect the effectiveness of our transformation. And as you mentioned, our CPS eLife had some changes in top management. Now, I believe we have already completed the succession of our top management team at CPIC Live. The new team will continue with our past policies and continue to boost the Changhang transformation and to push ahead with all the key initiatives to help the overall growth of the company. For the group level, at the group level we'll continue to Lay up our synergy to further support CPIC Life's business growth. Thank you. Now, I'll answer your second question. With pricing rate going down, I believe we will see some changes in our products. Now, in terms of the development, Power Life is a new direction, and the protection business is the new direction. So that's the overall direction. But ultimately, our protection business and the power life business, I mean, we need to be focused on our future strategy and also the changing requirements from the customers. Of course, we also need to consider regulatory changes. I think we don't have all the facts. But on the whole, we believe overall in the long term, ParLife will take up more than 50% of the share of our total business mix. Now, in terms of progress of our ParLife products, at the beginning of the year, you can see we started to push for ParLife products. Several years ago, actually, well, We actually focused a lot on Power Life. So our agents, they actually, they are quite familiar with Power Life products. So if we look at the sales numbers of Power Life, compared to last year, we actually grew by more than five-fold this year. But of course, it's still a small number as of now. As we speak, we are training our agents to sell more power life products. Well, let's work on the next question. Thank you. I'm from . I have the question, number one, about the future profits, that is the CSM MARGIN SECOND OF OUR PERFORMANCE NOW YOU ACHIEVED QUITE GOOD RESULTS IN THE FIRST HALF OF THE YEAR BUT WHAT ABOUT THE FUTURE POTENTIAL FOR PROFITABILITY NOW IN FIRST HALF YOU SEE CSM MARGIN IMPROVE BY 2.7% THAT'S QUITE A HARD WON ACHIEVEMENT So what is the reason for that? Because interest rate is going down, but why can you achieve positive growth? Second question about investment. As you mentioned, in terms of the SAA, you are adopting dumbbell strategy. And in the past several years, your investment Thank you. As you mentioned, CSM improved by 2.7% in H1 this year. Now that's better than last year. New business CSM grew by 0.5%. Operation variance adjustment contributed to 1.3 PTs. Now the 1.3 PTs VFA method, because of the investment growth, and they profit will grow and the influence from surrender also contributed positively so that is why we got the 1.9 pts and for CSM sorry the mic is not working now this year CSM this year Thank you for your question for investment. Now for CPIC investment, most of our investment business is in China domestically. So our investment performance is closely linked to China's economy. In H1, I believe China's GDP grew by 5%. That is still quite fast. In terms of compared to other major economies in the world, our infrastructure investment is expanding. Our CPI is stabilized. So I would say China's economy is quite resilient. But, of course, in H2 this year, we will see more challenges, I believe, The external environment is very complicated. A lot of geopolitical conflict going on outside China. So all these external factors will impact global and China's market sustainability. So for China's market, I believe, We are still going through the growing pains. That means the challenges will continue for quite a long time. For example, our domestic needs need a long time to be boosted, and our competitiveness needs a long time to grow. So I believe our macroeconomy or macro policy will continue to expand by cutting tax and other expenses and boosting or stimulating the economy. In terms of monetary policy, it may continue to expand by lowering the interest rate lowering the RRR in terms of property market risk and local government debt risks I believe the government is doing a lot of things so given all these I believe China's capital market in H2 will stabilize and There might be some kind of a structural opportunity, but on the whole the interest rate will continue to drop. For our SAA, we always focus on value investment, prudent investment, and long-term investment based on our ALM and the long-term goal. We will continue to have sophisticated investment tactics. We will focus, continue to stick with our dumbbell strategy, for example, by invest more in long-term assets. And on the other hand, we also explore opportunity in high-quality equity assets and alternative assets so as to have better risk-adjusted long-term investment yields. Now, as you mentioned, we also made some investment in some Hong Kong-listed company, Huanen International, and Huadi International. Now first of all, these are small cap companies in Hong Kong Stock Exchange. So our investment in them is quite small in terms of share of our total investment. Of course China's market is, China's government is trying, is making a lot of policies regarding The innovation in the energy sector, we believe is very important for China to achieve this kind of energy transformation. So these energy companies, we're going to serve the national strategy. They are quite attractive in terms of value. Of course, we've always focused all of them have their own focus areas and so based on their research and the study based on our internal discussion and we look at the competitiveness the barriers of entry and so they consider all kinds of factors to Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma We'll focus on the fundamentals of companies, of sectors, so that our overall portfolio will give us a stable long-term return. Thank you. Well, thank you for the question and answer. Let's move on to the next question. Thank you. I'm Li Jian from Huatai Securities. Two questions. Number one for Mr. Fu. Now, as we mentioned, you see the local government and the central government had raised a lot of requirements regarding the capitalization or market value management for listed companies. So what's your measures in CPIC? Second question about the agents. Now, You have 60,000 core agents and 183,000 agents in total. So are you reaching a turning point? So my question is that the 60,000 core agents, how do you see the number going forward? Is it going up or down? What do you think about their income, their productivity going forward? And there's some rumor that there's going to be some kind of commission-related rules for agency channel. So what's your take on that? No, thank you. Now, capital value, I mean market value of listed companies is... Now, of course, it's important. It's a key KPI for a listed company. Now, with this kind of policies launched, people are paying a lot of attention to this. I believe this is a new requirement in the new era. And this is how people expect it, I mean. CPIC, we always pay a lot of attention to our management of capitalization or market value. We always focus on the return to investors and the sustainable growth of our capital value. And now we have actually launched a more specific KPI This is for capitalization management, focusing mainly on maximization of the shareholder value and the company value. Now, we believe the basis is how to create value. That is to say, we need to create value in the first place so as to maximize our EV. And secondly, of course, the ultimate goal is to realize value so that EV can be, well, we can actually disclose our information on EV to the investors, to analysts. Going forward, we are going to, first of all, to reinforce our fundamentals and have a very clear strategy to boost our value growth, especially EV. And also we'll become more investor-oriented to have honest and transparent communication with the market, with investors and analysts. And of course, we need to boost our value performance. And lastly, we will continue to maintain our healthy level of dividend payout. so as to achieve a win-win solution for both the company and the capital market. Now for your second question, I would say our agency channel, we can see we utilized our new basic law to improve the agency team, with improved number of agents and improved level of new agent retention and productivity. Call agent is very important. This quality is a key indicator for our agency channel. You will see, of course, based on the realities of Chinese market, For example, the average income of the society, we actually changed our KPIs for co-agents. In the first half of this year, our co-agents grew by 0.8%. With the new basic law, we actually saw Positive growth in terms of team performance and team behavior. Of course, if there is this kind of commission related rules for agents, we will comply. So I have to be more compliant and also to better serve the team development. And in terms of team development, we are going to focus on quality recruitment and agent development and also change or improve the agent team mix. And we are going to have this kind of a differentiated or Faisal training for agents, new agents. And we're going to focus on some key outlets to serve as the pilot projects to enhance the development of new agents. So ultimately we can keep improving the quality and the number of our core agents. Thank you. Thank you. I'm Mao Tingting from CICC. I have the question number one on the bank channel. Well, the performance was quite good for H1. Now you mentioned the commission-related rules. So but what about your business plan and the targets for bank channel? And the second question on the PNC side. Now, first of all, congratulations, improvement for this year. But what are the reasons? And secondly, for the long term, the combined ratio of the PNC, what is the target? And how are you going to achieve the target? Thank you. Well, thank you for your question. Now, we believe this commission related rules, commission rules, and also the easing of the number of insurers a bank can cooperate with. I mean, this kind of a new trend, It's better for the virtuous competitive competition, virtuous circle for competition. So our bank channel will continue to improve our professionalism and to improve our competitiveness, to build this kind of a high quality service mechanism, to better cooperate with banks to serve diversify needs for the customers. Now for the bank channel, we will continue to stay focused on value growth, to boost the dynamism, to boost the momentum, and also focus on the value contribution. To be specific, first of all, we need to be specific or need to be focused, especially focusing on these kind of provincial capitals and key cities. And in terms of partner banks, we will focus more on strategic partners with differentiated policy for each bank partners. And secondly, we need to leverage our expertise in terms of product and service. We have this kind of golden triangle to serve customers' wealth needs, wealth protection needs, health needs, and retirement needs. For example, we have this kind of a 建想家 customer club to give them better value-added services. And our CPIC Home is also a competitive Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma The per capita bank productivity is already leading peers. Now for the P&C side, combined ratio 97.1%, improvement of 0.8 PTs. In terms of the drivers, first of all, we enhanced the expense management for auto insurance. Secondly, we did a lot of work in terms of some key cost areas. For example, the health care, health insurance and the liability insurance, these sectors saw improvement in terms of claims. For health insurance, for example, we become more diversified. We had a better share of high and mid-end health insurance. And we had more selective, we become more selective in terms of policy sponsored health insurance business. At the same time, we enhanced our management of intelligent risk management. and of course at the same time also crack down on insurance fraud. In terms of liability insurance, we continue to focus on the high quality areas and remove high risk businesses. And also we help our customers to also manage their risks, manage their damages. And you see P&C business will always focus on the sustainability of our P&C business. We focus on quality business. Going forward, we're going to set more KPIs to become more professional, to make risk reduction more system-based, to leverage Thank you. Now let's welcome an online question. So if you want to ask a question on the telephone, press the star key. To raise a question, please ask no more than two questions. Number one, from Zhao Yao, Morgan Stanley. Thank you for this opportunity. I'm Zhao Yao from Morgan Stanley. Two questions from me. Number one, on the left side, you see At the end of June, your core solvency for CPSC life is 121%, up slightly compared to last quarter. What are the reasons? And are you satisfied with this solvency ratio? Or what's the future for this solvency ratio? Second question. You'll see there's a lot of disasters, natural disasters. I mean, it's on the rise. So there's a lot of damages from these disasters. So from a CPSC perspective, commercial insurance companies, I mean, what are your challenges and opportunities in these areas? Now let me answer your first question. In terms of solvency ratio, now CPSC, We issued a perpetual bond, helped with our solvency ratio, and because of our internal capital accumulation, now we have a core solvency ratio at 121%. Now we believe the current level of solvency ratio There's still a slight gap, I would say. That's mainly given the external environment and business growth requirements, and also given regulatory requirements and operational needs. In the future, we also need to consider business expansion. I mean, we need to keep it at a proper level so as to seize upon opportunity on the market. At the moment, I would say with interest rate going down, interest linked products and equity share of equity investment will go up. So we believe there is still a gap, but we will continue We believe we can do it ourselves. We can improve our product margin so as to improve our solvency-adequacy ratio. Now, let me answer your second question. Thank you for your question. Of course, climate disasters, climate risks is a risk not only for insurance companies but also for the whole society. We see a lot of extreme weather events. Last year, you can see, according to government data, natural disaster damage reached 345 billion yuan, mainly from flood drought. According to Swiss Re, last year, insurance-related disaster damage is 108 billion USD. Now, we took measures. First of all, we enhanced our risk management capability, innovate our disaster insurance products, and improve our management of carbon emission. We developed our carbon emission mechanism. We actually include it into our group strategy. Now actually under the group board, we have a specific ESG committee. And at all levels of CPSC, we had ESG related working group. and Green Insurance and other low-carbon sectors, we all set KPIs for them. We continue to improve relevant evaluation mechanism. We also have our risk radar to better assess and alert these risks. We also help our customers to reduce these related risks. And in terms of innovation of our products, we launched a lot of products for climate response, clean energy, and EV vehicles. So in H1 this year, we actually, our premium from green insurance reached 34 billion yuan. In terms of catastrophe, disaster, The catastrophe insurance, our total SA for H1 this year was 500 billion. And in terms of the carbon emission of our investment portfolio, We did some calculation of our carbon emission from our investment portfolios. I would say we are one of the first among our peers to conduct this kind of calculation so as to give us more basis for Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Of course, all this is still in its early stage. We are going to do more, and the Chinese government are going to launch more in terms of energy transition and green economy. CPIC will contribute in this regard. Thank you. Let's move on. Well, thank you. I'm Zhou Chen from UBS. Now, I noticed that you see net profit improved by 37.1%. That's very good news. It's mainly because of the good performance of your investment. Why did you do well in investment in H1 this year? Is it because of your high dividend asset strategy? But of course, in the second half of the year, the Shanghai Stock Exchange, the Asian market is under pressure. So can your investment performance go on in the second half? Second question. We noticed that you sold a lot of traditional products in recent years. But now you see our 10-year debunk rate is going down. So you are under a lot of pressure in terms of asset, in terms of a liability side. And with the going down of pricing rate, traditional products, will face more pressure. So, I believe it's important to have a diversified product mix. Do you have relevant targets in this regard? And any KPIs that you can share for the next two to three years so that we can better track your performance? Well, thank you. First of all, the question about investment. Now, based on the new, even the new accounting standards, the stock market first of all go up and then go down. So, you see, there's still, There are structural opportunities. We always focus on proactive management of our equity investment. So in H1, we outperformed the market. And together with the downward trend of our interest rate, so the TPR asset value contribution improved a lot. so that our total investment income improved a lot. So for a long time, we always focused on the high dividend paying assets. And these go into the OCI assets. So our comprehensive investment yield Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma So our core competitiveness is our long-term investment logic and our disciplined investment practice. We're going to focus on this kind of a cross-cycle SAA so as to achieve risk-adjusted long-term return. We will have also flexible TAA to achieve, well, Long-term high yield. With all these, we believe we can iron out this kind of a short-term volatility so as to make our profit sustainable. Now, on the actual side of the net profit projection, now market, market, capital market volatility will impact our Net Profit Projection. Well, if we exclude the capital market and volatility, net profit is highly, is closely correlated with OPAT. Our OPAT will grow very slightly in the next two to three years. Now P&C side, we will look at the catastrophe impact. And for the life side, There will be some uncertainty. I mean, operation variance is stabilizing. I can even say it is improving. But of course, capital market volatility will have a quite bigger impact. Now, to answer your second question, our liability cost. As of the end of June this year, our in-force products break-even rate, in-force, effective break-even rate is under 2.5%. And the absolute break-even rate is even lower than 2.5%. Because starting from 2013 to 2016, We sold a lot of low guarantee rate products. The rate was 0.1%, 2.0%. We sold a lot of these kind of low guarantee rate products in 2013 to 2016. and the short-term changes will lead to some volatility, but our diversified business mix is how we can cope with the challenges of asset liability matching. So, diversification is both a means and an end in itself. At the same time, as we say, a peer comparable, for example, compared to peers, our growth is comparable. For example, they... Now, of course, we have power life and we have protection products, Now, what are we going to do in terms of the measures? No, actually, we have been pushing for diversification of products, especially for protection products, so as to meet the diversified needs of our customers. It's an ongoing process. At the same time that you mentioned our products, previously, We mainly sold Pa Life. Now, we are starting to redo the training for Pa Life products. Well, let's welcome the next question. Liu Qi from Guangdong Development Securities. Two questions. MBV started to turn positive and you see for two consecutive quarters. Now what about your 2025 MBV growth and for MBV, MB and MB margin. Secondly, your asset duration and the liability duration. What are those durations? What about the gap? What's the trend for the duration gap? Well, thank you. First of all, in terms of the MBV margin, now for 2025, for our margin, you see other insurance companies, they also see the part-life margin going down. But also, we are also developing our share, improving the share of protection product. We believe these two can break even. I believe we have quite a lot of experience in setting par life. So on the whole, in terms of the growth of value, I'm still positive. On the asset liability duration question, actually in recent years we expanded our asset allocation into long-term T-bonds. So our duration gap is going down in recent years. If you look at the H1 of this year, for live business, fixed income duration gap Fixed asset duration has improved about one year. So the duration, asset duration is more than 10. For liability duration, because we actually sold quite a lot of long-term products, so the liability duration is also going up. So the gap remained pretty much the same because of the data module calculation. So the liability duration is more sensitive to that of the asset side. So ultimately the as a liability duration gap actually expanded by 0.5 years. But still, I believe it's under control. It's within our expectation. If we consider power and the universal life, and also these products can absorb some of the interest rate risks So if we look at the effective gap, if we look at the effective duration gap, it would be less than half of the current gap. So we believe we are in line with the market in terms of duration gap. In the interest of time, we only have time for the last question on site. Thank you for the opportunity. I'm Hu Qiang. Now, first of all, on investment side, secondly, on the exposure to property market investment. Now you see fair value change amounted to 20.9 billion. Could you break it down? What's the attribution? Second, about property market investment, what's your exposure to that? And what is the structure of that? What are the changes? How about the future in terms of credit risk management? Thank you. First one, half and half. That is to fair value change. Half of it come from stocks and half of it come from fixed income assets. Second question about credit risk management. I believe most of you focused, paid a lot of attention to credit risk management. I believe CPIC is, I mean, We are prepared for a lot of questions in terms of credit risk management. As you can see, before you even see the credit defaults on the market, long before that, we have been prepared because we have a very sophisticated system to manage the credit risks. You see, we have I mean, for CPIC Live, PNC, I mean, different subsidiaries of CPIC have their own credit risk management team, but we all go by our group level credit management scheme. So that is to say, we can have this kind of centralized management for credit risk management management. So we all use the same standards across CPIC to cover all the steps of management. As of now, we are quite diversified in terms of our credit products. And in the history of the CPSC, we actually had very strict control for exposure for property market. As we have always been saying, we are quite prudent in terms of investment in property market. We exited a long time ago the key sensitive areas. And we also noticed the China's policy is, I mean China is heightened control for local government debt platform. So we will follow it up very closely monitor the risks of local government debt platform and while controlling the risks select some partners so overall we have very good credit risk management you can see you can see the credit ratings of our credit products I mean very good rating We always maintain this kind of very high ratings, credit ratings. We'll continue to stick with it. And we will sometimes select innovative, innovative fixed asset, accredited products. For example, ABS and RISC. Thank you for all your questions. And we also asked the questions from small and medium-sized investors. And now their question may be centered on the Changkang Action Plan and also pricing rate change. After that, the product strategy. And some other questions, we will answer them If you have further questions, you can contact our IR team. Thank you. That concludes this event. Thank you very much.