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

Good afternoon, ladies and gentlemen. Welcome to the CPIC Group 2026 Interim Results Announcement. I'm Shu Shaojun, CPIC Group Board Secretary. It's my great pleasure to talk to the investors, analysts, and friends from media about our performance and business in the first half of this year and also to listen to your views on us. To protect the interest of small and mid-sized investors, we are conducting this event online and offline, so as to cover more investors. After the meeting, you can also view this You can view the view back. You can access the view back of this event on our website. Now, let me introduce the executives. Mr. Zhao Yonggang, CPIC Group President, and Mr. Su Gang, CPIC Group Vice President and CFO, Mr. Cheng Hui, CPIC PNC General Manager, and also Mr. Li Jingsong, General Manager of CPIC Life. Our independent directors will also join this event offline and online. First of all, Mr. Zhao Yonggang, our president will give you an introduction of our performance in the first half of this year, to be followed by a Q&A session. Good afternoon, ladies and gentlemen, friends from the investment community and media. It's a great pleasure to meet you. In the first half of this year, in a very complex and fast-changing environment, we stayed focused on our core business of insurance. Thank you very much. Our group operating income amounted to $212 billion, up 5.8% year-on-year. Group OPAT reached $21.1 billion, up 6.2%. Group net profits reached $30.8 billion, up 10.4%. Net assets attributable to parent shareholders stood at $319.2 billion. And our comprehensive core solvency margin remained well above the regulatory requirements. We have been improving disclosure of operating profit, and following the implementation of the new accounting standards, net profit has become more sensitive to capital market development, and OPAT presents a clearer view of the company's long-term operating performance. In recent years, our group OPAT maintained steady growth. In the first half of this year, OPAT from live business was $15.9 billion, up 5.9% year-on-year, while P&C business reached $6.3 billion, up 26% year-on-year. On this issue of contractual service margin, well, CSM is a key financial indicator. It reflects the sustainability of the future profits. Our CSM has continued to grow since 2023, reaching $368.8 billion at the end of the first half of this year, up 3.3% from the end of 2025. By the end of June this year, our group net assets stood at $319 billion, up 5.6% year-on-year. Well, this is achieved on the back of a steady profit contribution and a solid foundation in asset liability matching. We also have a solid capital position. At the end of June this year, the comprehensive and the core solvency margin ratios were well above the regulatory requirements. We are committed to shareholder returns with a clearly defined medium and long-term dividend policy based on operating profit. Since 2007, we have distributed a total of 130 billion yuan in cash dividends to the shareholders. For the first half of this year, we optimized the dividend distribution arrangement and implemented an interim dividend for the first time with an interim DPS of 0.42 yuan and a total interim dividend amount of 4.04 billion, further enhancing investors' experience. Next, I will talk about the performance of our life business, P&C business, and also asset management business. For the life business, we remain committed to value growth and focused on regular premium business. We saw steady improvement in business quality and operational efficiency. To be specific, the total return premium reached 190 billion up or down 1.6% year-on-year. Regular FYP amounted to 30.7 billion, up 28%. And the 13-month and the 25-month persistency ratio were 96.8% and 94.8% respectively. In terms of new business, our MBV for the first half of this year grew 12.7% to 10.8 billion yuan. This was mainly driven by the agency channel. And in terms of MBV margin, it improved by 2.5 percentage points year-on-year to 17.5%. On the agency channel, we strengthened the systematic capacity building, which includes conducting customer engagement under multiple scenarios and driving the upward shift in the customer mix, and also provide the differentiated and others. To be specific, our monthly average agent headcount was 183,000 and our FYP per core agent and the monthly average FYC per agent both achieved double-digit growth. Our AI plus strategy also played a positive role in supporting our agents. For example, we launched the Xiao Lan AI agent to empower our sales agents. Actually, the average number of agents using Xiaolan was nearly 90,000, and those who use Xiaolan frequently saw increases in the FYP per agent, FYC per agent, active ratio, and the average number of long-term policies. Now, these indicators have all improved. For the bank insurance business, we strictly implemented regulatory requirement for consistency between filed and actual expenses. Also, we adhere to the value-oriented strategy. To be specific, our regular FYP growth from bank channel picked up quarter by quarter. Now, the number of active bank outlets measured by RP Business was nearly 5,000, up 4.9%. And the average regular premium per active bank outlet reached nearly 300,000. We also have a 健相家 health management program for bank channel customers. Actually, the number of requests from Jianxiangjia by mid-tier customers was above 10,000 in the first half of this year. Pacific Care Home is also a brand for premium retirement community. It also helped to maintain customer relation from the bank channel and nearly 30% of total FYPs are generated by using this platform. And the share of mid-tier customers and above increased by 5.6% to 34.2%. and the agency channel focused on mid-tier and high-net-wealth customers. In terms of product strategy, we continue to advance investment innovation in variable products. For example, the return premium for PAR business reached $65 billion, up 76% year-on-year. And the participating business as a share of the total FYPs rose to 55.5%, which was up by more than 160% year on year. In terms of the strategy on the P&C side, we continue to support the national strategies. In the first half of this year, we achieved steady premium growth on top of optimization of business mix. To be specific, its direct return premium reached $114 billion, up by 1.4% year-on-year. And the premium growth for the second quarter was 3.6%, much better than the first quarter. In terms of the auto insurance, because of the decline in new car sales in China, our DWPs from auto insurance was 53 billion percent, up by 0.2 percent year-on-year. Non-auto DWPs was 60.6 billion, up by 2.5 percent year-on-year. We continue to focus on quality and profitability to strengthen underwriting discipline and expense management. In the first half of this year, the combined ratio of P&C was 95% down by 1.3 percentage points, and of which the loss ratio was 68.7% down by 0.8 percentage points, and the underwriting expense ratio was 26.3% down by 0.5 PTs. So you can see our underwriting profits grew by 35.7% year on year. In terms of our capacity building, we continue to make efforts in this regard. As we mentioned, the underwriting combined ratio of auto insurance was 94.6%, down by 0.7 PTs, and the under-expense ratio improved by 0.7%. and we continue to improve precise management so that our auto insurance renewal rate was 79.2%, two percentage points better year on year. We also continue to accelerate the development of new energy vehicle business. His growth in the first half of this year was 20.9%, and his total share was 23.9%, up by 0.1 percentage points year on year. In terms of business mix, We continue to improve business mix and advance the risk reduction system. For non-auto insurance, the combined ratio was 95.3%, improving by 2.3 percentage points. And the top four non-auto business lines Produced underwriting profitability. Healthy insurance and liability insurance maintain the healthy growth. To be specific, healthy insurance recorded $17.1 billion in DWPs, up 10.4%. The liability insurance recorded $13.7 billion in DWPs, up by 6.6% year-on-year, and underwriting combined ratio improved by 0.4 percentage points year-on-year. In terms of asset management, we continue to adhere to the principle of value, long-term, prudent, and responsible investment, and strictly follow the ALM requirements to improve our SAA, and we continue to refine our dumbbell-shaped asset allocation strategy. By the end of June this year, our AUM maintained steady growth and surpassing 4 trillion yuan for the first time. Our investment asset grew by 4.4%. and AOM grew by 6.3%. And of this, the share of equity assets was 17.1%, up by 0.4 percentage points. The core equity investment was 13.9%, down by 0.5%. And the debt financial assets stood at 71.4%, down by 1%. We continue to explore opportunities in alternative instruments such as RIS and ABS, and we continue to explore a new model for diversified asset reliability matching. centering on net investment yield plus. We continue to track the matching of liability costs and asset return across multiple levels. Based on life numbers, maturity investment yield on the new fixed income investment covered guaranteed interest rate on new policies. The three-year average net investment yield covered the guaranteed interest rate. Under the three-year average comprehensive investment yield covered the cost of liabilities, which help us to maintain a reasonable safety margin in ALM. We also continue to optimize fixed income asset portfolios and increase Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Long-term risk-free interest rates stayed at low levels. We proactively seized structural investments, investment opportunities, and also maintained a margin of safety to manage the downward trends in a volatile market. The net total and comprehensive investment yields were 1.5%, 2.4%, and 1.8% respectively. The market price of our dividend value equity portfolio experienced significant fluctuations, which led to a short-term pressure on our comprehensive investment yield. But in the long run, we can navigate market cycles and maintain competitive comprehensive investment yield. In terms of credit risk management, our enterprise bond holdings and financial bond holdings issued by non-government-sponsored banks maintained high debt and issuer credit ratings. Investments in non-public financing instruments as a share of total investments further declined. Well, that is the numbers and performance of our core business lines. To sum up, I would say the international market is quite complex and challenging. On the domestic side, China is also restructuring its economy. The government is also trying to improve safety, social safety net, and the people's livelihood, which will create more opportunity for the insurance industry. We will strive toward this vision of a top-tier insurance service conglomerate with market leadership, international competitiveness, and overall strength, and continue to create value for shareholders, customers, employees, and society. We are going to further improve the quality and the productivity of the agency channel, sharpen the competitiveness of a regular premium business of bank channel, and in terms of P&C business, we will put profitability first, continue to strengthen business quality control, improve catastrophe response mechanism, and improve risk reduction so as to have sustainable growth. In terms of risk management and asset management, we will uphold long-term thinking, persist in ALM, and seize investment opportunity to generate steady, sustainable investment return. That concludes my presentation. Thank you. Well, thank you, Mr. Zhao, for your detailed presentation. Now we will open the floor to questions. Now you can also ask questions over the telephone and also online. Please ask no more than two questions. First of all, we all have some questions on site. Thank you for the opportunity. I'm from Guotai Haitong Securities, Liu Xinqi. First of all, congratulations on your steady performance. I have two questions on the liability side, first of all, about the new requirements from the regulators. Now, what's your MBV? Outlook. Because for the first half of this year, your MBV achieved double-digit growth. But what about July onwards? With Document 65 from the regulators, we saw some pressures on the market in terms of premium growth. So what is your NPV outlook for the second half of this year and also for next year? Second question, regarding payment liability structure, Now, a lot of the insurance pays a lot of attention to the growth of, well, par life. Now, your share of par business is already 55%. We believe given the low interest rate, too high a share of par life is not necessarily a good thing. Because in terms of Well, sometimes you should utilize traditional insurance to secure low liability cost. So what is your plan for your participating business? If the customer prefers participating live, how are you going to allocate and maintain the balance between PAR and traditional business? Thank you for your question and your attention. First of all, regarding your question on MBV, Now, I believe, first of all, if we look at the first half of numbers, Mr. Zhao has given you a lot of numbers. In the first six months, I believe CPIC, our second quarter business was better than the first quarter. I believe CPIC is quite unique in this regard. If we look at the first half of this year, I believe we're going to pursue MBV grows from several areas. First of all, continue to improve customer segmentation. Secondly, improve product mix, product structure. For example, by promoting protection type of business. For example, this kind of long-term care products. These products grew very popular on the market. On the other hand, we also improve the share of our participating insurance. And also we focus on developing our team. First of all, our, well, I mean, back office managers. For example, the building, developing of these managers. And also on the front line, our agency team. also is improving, for example, by becoming more professional, by becoming more digitally savvy, younger, etc. So our agency team is also improving. If we look at the bank channel, we are always improving, building this kind of high-quality bank channel team. So that we can have more opportunity for the bank business development. We also improve our refined management. We focus on value growth, we focus on efficiency, and also we promoted this kind of AI or digital empowerment. For example, the AI Plus strategy is a key priority project for CPIC. CPIC Live is actively promoting our AI digital strategy. For example, by improving our processes and procedures, and in terms of claims, settlement, underwriting, we are also adopting AI tools, improving the AI empowerment, so that we can achieve further growth in value. And also we strengthen our risk management and compliance management. So all these factors made it possible for us to grow for the two quarters of the first half of this year. But of course, There are regulatory changes. There are pressures for next year, for the second half of this year. This is an issue for the whole industry. But on the whole, we are quite optimistic about our business perspective outlook. Now, first of all, in terms of the timing, if we look at the last three years, You see MBV grew quite fast for us. These are all double-digit growth for the last three years. So we believe we are sustainable in terms of the timing, in terms of the pace of business, and also in terms of our strategies. We are quite balanced in terms of meeting customer needs and keeping up the seasonality or business pace. And if we look at our team, currently we still have room for improvement in these kind of tier one cities. In terms of bank channel, we focus more on tier one city rather than tier three, tier four smaller cities. So bank channel strategy is different from the agency business. So they complement each other, I mean the two channels. And in terms of the growth model, we on the one hand promote agency and the bank channel, and we also now are developing our work site marketing. So I believe based on all these, although we have a quite high baseline, we are still optimistic. Secondly, in terms of the liability for CPIC life, we actually set or anchor our liability cost based on our product. For example, we are promoting participating insurance since the second half of last year and we saw very good results. Going forward, how are we going to approach this? I believe as a big insurance company, first of all, we need to meet customer needs and on top of that, we need to improve our liabilities. So in the second half of this year, in terms of our product strategy for the agency channel, since we'll have more higher-end customers, we are going to promote whole life participating products and whole life incremental life. And so for the second half of the year, We are going to meet the different needs from different customer segments. While focusing on participating life, we are going to also balance it with traditional life. For example, also long-term care products will be launched. On the one hand, long-term care products will be combined with Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma Weidong Zhang, Mingchao Wang, Yonggang Zhao, Xin Ma CPIC Medical Insurance working together, I mean CPIC Life and CPIC Health working together to promote the CPIC Blue health insurance products to be sold via the agency channel. For the bank channel, we are going to focus on value, focus on high-end customers, Thank you. Now let's welcome the next question. Thank you. I'm from Sunting. I'm from Dongwu Securities. First of all, congratulations on your solid performance. Both on the live side and the PNC side, you improved your combined ratio by 1.3 PTs. I have two questions. Number one, As Mr. Zhao mentioned, you gave us a lot of numbers on your performance. We are happy to see a lot of good numbers. But we still like to see what's your view on your performance so far this year? And also going forward, for the industry as a whole, what are the changes? And how are you going to respond to these changes? And for the whole year, what's your annual targets? What's your view on the annual targets? Second question about the new regulatory rules. Actually on your slides, page 20 of your slides, we don't see specific numbers on page 20. Now, in terms of the new regulatory KPIs, how are you coping? What's your calculation on these new indicators? And how are you going to do in terms of the asset side and the liability side? Well, maybe I answer your first question. Thank you for your attention. Now, I would say in the first half of this year, we continued to seek progress while maintaining stability. And guided by the 15th year plan, we are actually delivering quite stable improvement in our key KPIs. Our overall strength has also improved, especially given this kind of complicated environment. I believe we have demonstrated a lot of resilience. If you want me to comment on the performance so far, I would say we can see four features. Number one, our core business is stable. Secondly, we are seeing new momentum. And thirdly, we see better synergy. And fourthly, we see better technology empowerment. Now for our core insurance business, we continue to focus on quality growth. As we mentioned, our life business, our regular premium growth was very good, up by 28% year-on-year. MBV margin also grew quite stably. And behind that, we would see the product mix and our customer mix also improved. Now for the P&C business, our combined ratio improved one of our best levels in recent years, now standing at 95%. And we also see a new energy vehicle also give us quite steady growth in terms of asset management business. Now we are sticking to our long-term investment strategy. We focus a lot on SAA. We remain disciplined and remain resolute on our SAA and paid a lot of attention to our ALM. So our investment performance was quite stable. Secondly, as we mentioned, we saw this kind of new growth momentum, new areas of growth. For example, we are actively promoting technology insurance, green insurance, and actually The premium income from technology insurance grew nearly 18% Yang Ye. And we also saw a lot of progress in terms of serving the new production force. And our green insurance premium reached nearly 40 billion yuan. In terms of the health insurance, we are also expanding our presence. Our commercial health insurance new premium grew by double digits. And also, we saw double digits for the coverage of government-mandated long-term care insurance. And our AUM in the first and the second pillar of pension schemes exceeded 1 trillion yuan. So that's the second point. And thirdly, better coordination and synergy. That is to say, to better develop this kind of cross-selling and synergy and coordination We focus more on the customer orientation. For example, coordination between life and the PNC subsidiary, and also integration of products and services, and asset and liability coordination. So this kind of synergy and coordination helped to generate a lot of good results. And of course, we also cultivated our strategic customers. We integrated our insurance, service, and investment sides. And we developed a series of strategic customers and major projects. And you can see the number of multi-policy customers and the rate of cross-selling both rose steadily. And fourthly, We strengthen the technology empowerment to boost the quality and efficiency of our core business. For example, we are actively promoting AI plus strategy to put in place our vertical domain large models. And we are happy to see the rollout of some of the key projects. For example, as I mentioned, for the life business, we launched the Xiao Lan agent, AI agent for our sales agent, for our life agents. And we also launched projects to help P&C business to better manage its claims. And also we paid a lot of attention to data security. We are the first in China to pass the Data Security Capacity Maturity Model DSM Level 4 certification. So I would say if we look at the first half of this year, I believe these four points stood out. But of course, the industry is developing quite fast with a complicated backdrop, backdrop. CPIC has maintained a stable growth. We are serving the real economy and the people's well-being. And given this, we do see some opportunities, for example, for life business. We believe our live products has become a very important tool for people, for household wealth allocation. For example, variable insurance sold very well, and this also improved the company's liability cost. Now for auto insurance, well, new energy vehicle insurance supported our premium growth. And this development of a new productive force and the green transition reinforced our role as an economic shock absorber and social stabilizer. On the investment side, structural divergence in the equity market increased volatility. It will have a notable impact on our profits. On the regulatory front, tight supervision continued. It is guiding the industry towards long-term, healthy and high-quality development. For the second half of this year, CPIC will continue to pursue high-quality growth. We need to focus on three areas. Number one, we need to serve China's 15th five-year plan and seize new opportunities. For example, we need to align ourselves with the government's big strategies and also the development of the industries. For example, the technology innovation, green development, and shipping safety, etc. On the other hand, we also need to focus on For example, health and elderly care for the key population groups so that we can uncover opportunities in new fields and new models. Secondly, We need to focus on improving the quality and efficiency of our business, insurance business. For the life business, for the life side, we need to coordinate product and the channel strategy, accelerate a breakthrough in key areas, and improve customer segmentation. to drive sustainable sustained value growth and also improve high quality sales force and diversify profit sources. For the P&C business, we need to consolidate our business space and seize opportunities in key areas. For example, there's kind of a new areas And on the investment side, we need to improve long-term mechanism for asset liability coordination and better respond to, for example, regulatory rules, new rules, strengthen our investment research, diversify asset allocation strategy so as to deliver stable and sustainable returns. And thirdly, we should also advance our three core strategies or priorities and build core competitiveness. For example, our big healthcare strategy. We need to improve product innovation and model optimization. In terms of internationalization strategy, we should focus on improving overseas capability and strengthen our Hong Kong operations. For the AI plus strategy, we should accelerate the R&D and large-scale deployment of high-value AI applications. This can speed up digital intelligent transformation and also help to empower our business. To sum up, I would say we should remain committed to these principles. We should pursue higher quality, better resilience, more solid foundation, and more breakthroughs for our business so as to better meet our annual targets. Thank you. Thank you. I'll answer your second question. Maybe I will just add a little bit. Now the new rules on asset liability for insurance business received a lot of attention. I would say it will have a very profound impact on insurance business asset allocation, asset management. Now this new regulatory document is It's like a combination of previous rules. It's not very comprehensive. I would say we should focus on four areas. Because first of all, we focus on the governance of insurance companies. Secondly, it enhances the quantitative indicators. And thirdly, it broadens the evaluation horizon. Now actually before the document officially released, we have been actually making preparations for the forthcoming rules. For example, we studied the preliminary documents, we have been a participant of relevant seminars and studies for the industry. And we are also trying to revise relevant data reporting mechanism so as to meet the new requirements. Given this kind of regulatory indicators and monetary indicators, I would say LIFE and PNC, both are doing quite well. For example, for PNC traditional account, our coverage ratio was 115%. And for LIFE business, the interest rate hedging The ratio is more than 80%. And the other indicators we also scored quite well. So if we look at these indicators, if you want to see the future performance of CPIC, you can look at the stress testing. You can look at the metrics. These parameters, for example, during the stress testing, equity asset reduction, we are for one year to three years. I believe that that is a tall order. But for CPIC, our SAA These indicators will be more under control going forward, especially for the life business. On the liability side, you can see it's very diversified. And also on the asset side, China's interest rate is going downwards. So we have long been discussing or studying This. Now, for example, we have come up with a net investment yield plus strategy. Now, because the life business has very long liability. Very long fixed liabilities. So we need to take a holistic approach. We need to consider a lot of factors so that we can come up with a more refined, more consolidated tools, platforms, so as to better coordinate assets and the liability matching. We believe We should start from the product. We should anchor against the liability and drive asset allocation on top of that. So for SAA, we need to be prudent. We need to be resolute. We need to have diversification and differentiation. For TAA, we need to be more dynamic so as to cope with the rapid changes of the market. We need to be disciplined. We need to be controllable so that the long-term investment yield can better cover our liability costs. In terms of fixed income, we will remain More timely to seize very fast these allocation opportunities so that our interest bond can give us good results. And we also look at the opportunities, these kind of new emerging opportunities, alternative opportunities. We need to consider the valuation and market structure so as to adjust our allocations so that we can improve our long-term return and also improve our multiple manager approach. Of course, we will further improve In terms of equity investment and other kinds of alternative investment. On the whole, Based on the new ALM requirements, we are going to improve our internal structure, internal organization with adjusted KPIs, evaluation mechanism, etc., so that we can meet new regulatory rules. Thank you. Let's welcome the next question. Thank you. I'm Dan Xiongyi from Securities Newspaper. For the first time, you have interim dividend. So what are the factors you considered? And what's the overall yearly outlook? And do you have any future plans? Thank you. Now, as you see, this year we optimized the structure of dividend payout and launched for the first time the interim dividend. We want to make it long term so that we can improve the cash return for our investors and improve their experience. Now, interim dividend is a very important part of our annual dividend payout. We anchor against OPAT and also consider this kind of solvency ratio and also the needs of investors so as to decide a ratio between interim dividend and year-end dividend. For example, this time we are going to pay out 0.42 yuan per share. So if we calculate by OPAT, the ratio is 19%. Now this ratio is comparable against peers. But if we calculate by net profit, then the dividend rate is 13.1%. Now this number is higher than most of our peers. Regarding the total year dividend, first of all, our long-term and mid-term dividend payout policy is quite stable. That is to say, we look at our OPAT, we look at our solvency, we look at our business. Secondly, life CSM and spread and PNC profitability are key factors for our dividend payout. I believe these factors will continue to grow stably going forward. So, I believe we pay a lot of attention to return to customers, to investors. We are confident we can deliver stable long-term foreseeable return to our investors. Thank you. Well, let's continue the questions. Well, thank you for the opportunity. I'm Ge Yunxiang from Zhonghai Securities. Now, two questions. Number one, the issue of aging. Some other insurance companies are making inroads into elderly care products. So what's your efforts in the retirement elderly care area? And second question, on the financial numbers, we can see tax, your income tax is going down. For the first quarter. Now, this is particularly evident for the life business. So, could you tell me something about the reason for reduction in income tax? Thank you for your question. Now, to answer your first question regarding the population aging and our response, as you mentioned, as China's population ages, China is also promoting a health strategy and the people in China are having more and more higher requirements for retirement and elderly care services. Now these present us with more opportunities. For CPIC, I would say we We are quite consistent in our big health strategy. For example, more than five years ago, we launched the big health strategy. And now we upgraded it to the big health and wellness strategy. And we are actually making it one of our top three strategies. In terms of the targets for this strategy, I would say we need to build an integrated health and wellness ecosystem to strengthen the synergy between insurance, investment, and wellness service. and promote joint growth scenario integration and the very co-creation. So this is the key target for our health and wellness strategy. If we look at the first half of this year, I would say we have made some progress in line with our expectation. We continue to enhance top-level design, coordinated management, and talent management at each level. For example, we have trained our people, we have built relevant mechanisms. I would say our health and wellness strategy has saw very good results, and also it has brought Very positive impact on our insurance business. I would say we have made three big moves. Number one, in terms of promoting the coordination between health insurance and pension business. For example, we accelerated product innovation and iteration for health insurance. PREMIUM FOR COMMERCIAL HEALTH INSURANCE POLICY GREW BY 16% YANG YE. THE NUMBER OF PEOPLE COVERED BY GOVERNMENT-MANDATED LONG-TERM CARE INSURANCE INCREASED GREATLY. We also seized opportunities from new health insurance regulations and are developing products such as individual account medical insurance and participating health insurance. In terms of pension business, we made arrangements across the three pillars of pension with a focus on enhancing pension investment returns. For example, the cumulative returns of Changjiang Pensions' single fixed income portfolios, single equity-linked portfolios, and collective fixed income portfolios have all ranked among the top in the market. And also we are happy to see that the asset under management for the second quarter, for the second pillar, The enterprise annuity surpassed one trillion yuan for the first time. The second breakthrough was in terms of elderly care and rehabilitation. For example, our CPIC home, that is our premium retirement community, Now we have 14 of them in operation. We have more than 3,500 long-term residents. And nearly 350 of them, of those residents, are suffering from dementia. We also are actually making progress in terms of light asset projects. We also have this kind of a Bai Sui Ju program. By leveraging this Bai Sui Ju program, we can have smart service devices for data collection and management. To date, it has served over 100,000 customers. We also have built a direct billing medical network across China, which now covered 1,210 medical vendors. And this covered 83 of the top 100 hospitals on the Fudan China Hospital list. And the Guangci CPIC International Hospital Alliance has now grown to 158 member institutions. And the third breakthrough is for the integration between insurance and the service to boost the business and wellness ecosystem. CPIC Live leveraged the elderly care community to enhance high net wealth customer development. For example, for the first half of this year, the number of high net wealth Life insurance customers driven by the retirement program increased by 37% year-on-year. For the P&C side, by utilizing the wellness ecosystem strength, our CPIC P&C improved auto insurance claim service It helped to improve customer experience and also reduced the average claims payout. For CPIC Health, we utilized the Yipeitong that is a one-stop medical treatment claims solution. To date, the Yipeitong has served more than 750 enterprises and 610,000 users. I would say for the first half of this year we have improved the quality of our health and wellness strategy. And also we can see this also empowered our business. In the second half of this year we need to deepen the integration We need to implement our three top projects, strategies to deepen the integration of health and wellness service so as to better enable two-way empowerment between services and the core business so as to better serve our business and also our customers. Thank you. Now, let me continue to answer your question on the income tax. Now, of course, yes, our income tax actually declined. This is mainly because of a decline in life business. Two reasons for that. Number one, In previous years, for the life business, it remained prudent in terms of accounting judgment. So, because of that, actually it does not record deferred income. But now the government has confirmed that we should adopt the new standards so that using the new standards actually we can claim full confirmation for deferred income tax. So going forward, on the other hand, the company is making investment into government bonds, long-term bonds. So these also add to tax deductibles. Thank you. Thank you. Let's welcome the next question over the phone. If you want to ask questions via the telephone, please press star 1 to queue and then ask a question after confirmation. Please identify yourself and your employer before you ask questions. Please ask no more than two questions. Now we have a question from Mr. Zhou Chen from Credit Suisse.

Well, thank you. I'm from UBS.

Now, thank you and congratulations on your good performance. Number one question is about the investment. Now, we see the market is quite divergent for the first half. And you demonstrated resilience. Now, could you tell me something about the market? I mean, for example, the third quarter or so far the third quarter. What's your investment performance? And what about this kind of high dividend stocks and growth shares? So, what's your view on that? For example, this kind of growth shares tech? Technology Shares, for example. Second question, you see your actual numbers were better than expected in terms of growth, for example, OPAT. Now, could you tell me something about, I mean, previously you have been surpassing your guideline, guidance. Now, OPAT, could you tell me more about the OPAT, for example, by life, by PNC, and what's your overview, what's your out view for OPAT? Now, maybe let me answer your questions. You asked actually quite a lot of questions. Now, of course, you'll see investment yield is a very important topic for us. Because it will impact on our net profit. Now CPIC pays a lot of attention to our investment yield. Now for the first half of this year, our investment yield, maybe I'll give you some background. Now we look at the net total and the comprehensive investment yields. And for the net yield, I would say it's within our expectation. It was done by 0.2 PTs. Now, it was because of a lot of factors. It's not unexpected. For example, maturing of previously high yielding assets, etc. But we manage reinvestment. We have a TAA to counter-set, offset this kind of impact. If we look at the absolute number, 1.5 non-annualized return, It's actually the best among our listed peers. Total investment yield grew a little bit, mainly thanks to TAA contribution, for example, the trading spread for stocks and also for funds. and TPL also made some, TPL assets also made some contributions. But of course, our comprehensive investment yield faced a lot of pressure compared to our peers. I would say it's more like a real life stress testing. Especially for Q2, the stock market was quite divergent. For example, the China stock index actually was down by 14%. That's a very big reduction. And also, our core equity strategy faced a lot of adverse influence in a lot of dimensions. For example, our underlying equity is different from the K-type divergence, and our A plus H share strategy is also producing negative effect. We are quite active in terms of managing equity. We have more in equity and less on funds, mutual funds. So this is also divergent from the market trend in the first half of this year. And fourthly, we are quite prudent in pursuing our investment portfolio. If we look at the numbers, for life business, our core sovereignty actually ranked number two among listed peers. So given these factors, these dimensions, these factors, our core equity strategy faced a lot of stress. But we believe this is a temporary thing. It's a transitional thing. It's not for the long term. For the net and the total and the comprehensive investment yield, if we look at them, I believe in the short term you cannot be best in all of them. Currently we focus first of all on net investment yield and also pay attention to total and comprehensive yield. So we believe sometimes it is inevitable that we might have a lagging comprehensive investment yield. The peers have different pictures in terms of investment yields because of a lot of reasons. For example, their business, their sovereignty, their dividend payout strategy, etc. So if we only look at the short term, if we just compare numbers in the short term, we don't believe it is comprehensive enough, it is adequate, it's meaningful. Now for CPIC, we are mature, we are patient, patient funding. So we should stick to our principle. We should remain prudent and resolute. Maybe it's a slow bull market, a long bull market. We need to be flexible and disciplined. We should seize upon the kind of phasal opportunity on the market. Seize upon this kind of opportunity generated by transition, market transition. So for our CPIC, we now pursue multiple asset managers I believe this kind of a multiple manager approach is quite unique on the market so that our long-term performance can be more predictable and stable. I believe the resilience of our strategy is under pressure, of course, this time. Of course we do see some drawbacks, for example a lack of elasticity for our current strategy in this kind of a K-type divergence. So that going forward we can be more flexible, we can tap into the strengths of our internal investment managers and external asset managers. Of course, we all know that starting from July, the market also went through some changes, especially the rotation of the styles for equity. Now, there will be a rebalance between growth and value shares. For each share market rebounded, it's good for us. And for mutual fund, the effect of the hurting of mutual fund is diminishing. I believe the negative impact of Q2 is also reducing. So I believe these are quite good news for CPIC. First of all, as I mentioned, we care most about net investment yield, but that's not to say we neglect or ignore comprehensive or total investment yield. Regarding the whole year investment yield, we believe Asia market will become more balanced, Earning driven opportunities will be the mainstay and for each share we believe each share market will still focus more on high dividend payout shares Now all these evolvements will be beneficial to CPIC. We are going to look at the timing opportunities. We are going to improve to better select this kind of growth opportunities under its satellite strategy. We are confident we can beat the indicators, beat the benchmarks so as to boost the total investment yield and comprehensive investment yield. I believe that is our outlook and comment on our investment yields. As you mentioned the issue about the profit, could you repeat your question about the profit? Could you repeat that? For OPAT? Now the drivers of OPAT is CSM amortization as a key source and also spread and also P&C's underwriting profitability. Now, for the first half of this year, for life, CSM improved by more than 4% year-on-year, and the spread is still going up. And the PNC profitability, underwriting profitability, also improved by 1.4%. So if we look at them more in details, for life, including Hong Kong, OPAT 15.8 billion. For PNC, OPAT 6.2 billion. If we look at the yearly picture, CSM amortization will continue to grow steadily. That will be a main driver of OPAT. And for some of the regulatory guidance for P&C business, its underwriting profitability will continue to grow, thus contributing to group OPAT. In the long term, We are going to improve CSM growth so as to make it an underpin of our OPAT. Although there might be changes in product mix, There will be some pressure. However, as the industry grows as a whole towards high quality growth, we believe OPAT is on a good trend. CPIC is the first echelon, first tier listed insurance companies. We believe we are competitive in this regard. Well, let's welcome the next question. Thank you. I'm Li Jian from Huatai Securities. First of all, my comment on your performance, I believe CPIC is a balanced company in terms of accessibility and liability side. Now I have two questions. Number one, for life business, your product margin is growing up. This is quite rare among your peers because a lot of margins, for example, because of the transition toward par life, margin will be under pressure. But how can you improve your margin? Is it sustainable? Second question, on the P&C side, Now underwriting profitability is growing, is improving, loss ratio, expense ratio both improved for auto and non-auto business. Now around 95% combined ratio. Can it be sustainable? Thank you. Thank you for your attention. Let me answer the live question. Now, in terms of margin, MBV and MBV margin are improving going forward. We believe we are going to maintain stable margin. Now, How did we do that? That's mainly thanks to several things. Number one, we stick to the regulatory rules regarding the integrity between reported and filed and actual expense. Secondly, we continue with customer segmentation. For this year, we can see We improved in this regard. For example, we now can very accurately identify different segmented customers. For example, we launched an AI system to Previously, last year we focused on improving customer experience. This year we now improved the system to better identify different segments of customers. For example, better identify their different life cycles, life stages, etc. so that we can more accurately pinpoint their actual needs and differentiated business development for customers. For different segments, we have different approaches. We can approach them online and then follow up offline. I have some numbers for you. With this kind of customer relation development, we see some changes. Number one, for example, we have more customers from bigger cities and actually premium per customer increased by 3%. And more customers are paying more attention to their protection. And thirdly, for the issue of product, we are improving product structure. Several things here. In terms of the product format, we are making adjustments, for example, be it traditional or participating life. Secondly, in terms of premium payment, 5-pay, 10-pay, now these 5-pay, 10-pay products are Improving in terms of proportion. And thirdly, in terms of function, we are launching more long-term care products. Fourthly, in terms of the horizon of protection, duration of protection, we are also expanding that. Also, fourthly, we are improving the health and wellness ecosystem. The big health and wellness strategy is our top three strategies for CPIC Group. And fifthly, we are improving refined management. We are trying to improve customer experience in this regard. And sixthly, we are continuing to improve AI or digital empowerment, digital empowerment. So we are going to further improve our MBV and MBV margin. from these angles. Now, let me answer your question on the PNC business. Now, combined ratio for the first half of this year continued to improve this year, which now stood at 95% down by 1.3 PTs. Now, combined ratio, loss ratio, and expense ratio They both improved, which is quite a big feat. Now the reasons, I believe there are three reasons. Number one, we improved, I mean, or adjusted our business philosophy for P&C business. We remain compliant. To focus on risk and quality business, we focus not only on volume, but more on quality and efficiency. We implement our big targets, for example, by focusing on focusing on income, on profitability, on cash flow. This is something we do on all levels of our business. Now, if we look at the business, daily business, we did two things. Number one, we adjusted the structure, combined the ratio of The loss ratio was 0.8 PTs. That is mainly because we proactively adjusted our business. For example, personal credit guarantee business was terminated. and our risk re-exposure in this regard were basically removed by this year. Secondly, we cut our expenses, cut our costs. Our expense ratio was down by 0.5 pts. We strictly implement Regular requirement regarding integrity between filed and actual expense. In terms of our business operation, we continue to improve anti-fraud, and also we continue to improve the management of our vendors. But of course, unresolved, unsettled results improved by 3.3 PTs. That is to say, we have a very good foundation for the overall improvement in underwriting profitability. And another thing is that we are now improving our risk reduction capabilities. So it's not only our risk management, risk compensation after accident occurred. We now move it forward. To make it a full life cycle, for example, we now collaborate with universities and other research institutes to do research on this kind of risk reduction. For example, we are now developing a catastrophe reduction engine. And by leveraging our own risk radar in the first half of this year, we have served more than 100,000 customers in terms of offering them anti-flood services. So we better reduce this kind of flood risk and offset this kind of impact from extreme weather events. And thirdly, we are developing a long-term protection mechanism, that is to say, starting from talent, technology, and evaluation. In terms of talent building, we have hired professional talents, especially biomedical, severe, autonomous driving, etc. So we need to make our people more professional, have a more professional team. At the same time, Under the group strategy, we are putting in place relevant P&C scenarios. For example, AI application scenarios, claims settlement, AI customer service. I believe technology is playing a bigger and bigger role in reducing costs. Thirdly, in terms of performance evaluation, we put efficiency first. We focus on compliance and risk management so that we have a better foundation for quality growth. I believe The biggest challenge for P&C company is climate change, uncertainty of climate risk. For example, El Nino effect, this round of El Nino effect, a lot of typhoons in China, have given us more risks, not to mention this kind of a storm and other kinds of landslide. I mean, it gave us some challenges, but we are still confident. We will continue with our prudent strategy to address the challenges. On the whole, I believe we are improving our efficiency and quality of business. This trend will continue. We hope that Weidong P&C Company can make more contribution to the group as a whole. Thank you for the questions. In the interest of time, we now end the Q&A session. And before the meeting, actually, we solicited some questions from small and mid-sized investors. And these questions were already answered. For example, regarding the interim dividend payout, product strategy, and also business outlook, etc., SAA, etc. We have already covered those questions. And if you have further questions, we can take it offline. And for the online broadcasting, questions will be answered in terms of text messages. If you have more questions, you can contact our investor relations team. Well, that ends our meeting. Thank you. Goodbye.