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spk02: Thank you for standing by for FONWA's fourth quarter and fiscal year 2020 earnings conference call. At this time, all participants are in listen-only mode. All lines have been placed on mute to prevent background noise. After the management's prepared remarks, there will be a question and answer session. Please follow the instructions given at that time if you'd like to ask questions. For your information, this conference call is now being broadcast live over the internet. Webcast replay will be available within three hours after the conference is finished. Please visit Funwa's IR website at ir.funwaholdings.com under the Events and Webcast section. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Ms. Oasis Chu, Funwa's Investor Relations Manager.
spk03: Good morning. Welcome to our fourth quarter and full year 2020 Endings Conference Call. The Endings results were released earlier today and are available on our IR website as well as on your file. Before we continue, please know that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause our actual results to differ materially from those projected or anticipated. Such risks and uncertainties include but not limited to those outlined in our filings with the FCC, including our registration statement on Psalm 20F. We do not undertake any obligation to update this forward-looking information. except as required under applicable law. Joining us today are our Chief Executive Officer, Mr. Chenglin Wang, Chief Financial Officer, Mr. Peng Ge. Mr. Wang will provide a review of our financial highlights in fourth quarter and fiscal year 2020. There will be a Q&A session after the prepared remarks. Now I will turn the call over to Mr. Wang.
spk04: Hello, everyone. Welcome to the fourth quarter of 2020, the annual financial report conference. Today, I will host the conference with the Chief Financial Officer, Mr. Ge Peng, and the Secretary-General, Ms. Li Li. I will present to you Thank you for joining us on today's conference call. Here with me, we have our Chief Financial Officer, Mr. Punggol, and our Board Secretary, Julie Lee.
spk03: On today's call, I will share with you our new strategy initiatives and some key progress, followed by our financial forecast for 2021. Mr. Guo and I will take your questions after the report.
spk04: to maintain a healthy development. In 2020, in the face of the ongoing impact and challenge of the COVID-19 pandemic, FanHua has achieved a large-scale breakthrough of 1.1 billion yuan, which is equal to a growth of 16.3%. This is a significant milestone for FanHua's development, and it has achieved a profit of more than 300 million yuan throughout the year. 2020年第四季度,泛华受险7家总保费规模28.8亿元,同比增长21%,经营利润达到7187.4万元,超出预期。 Part 1. In 2020, while the China's life insurance industry was hit hard by the COVID-19 pandemic,
spk03: Fanghua will stoke the test and maintain healthy development. In 2020, despite the continued challenges from COVID-19, Fanghua accomplished another major milestone with our growth return premiums on regular life insurance business exceeding 10 billion RMB, representing a year-over-year growth of 16.3% and our operating profit reaching 300 million RMB. In the fourth quarter of 2020, the gross return premiums of our regular life insurance visits increased 21% year-over-year to 2.9 billion RMB, operating profits reached 71.9 million RMB, exceeding our previous expectations.
spk04: In 2020, China's insurance market will slow down, but the slowdown believes that the trend of long-term rapid growth in the Chinese insurance industry will not change, and the development of the insurance intermediary will be faster than the insurance industry. Second, currently, in the Chinese insurance intermediary market, there is a 2A model for agents. There is also a 2B mode that faces the channel and a 2C mode that faces the customer directly. But due to the changes in new technology applications and the market environment, a single mode may not be able to maintain a strong vitality for a long time. We always believe that no matter which mode can serve the customer well, extend the customer's life cycle, Part two, our strategy assessment.
spk03: First, although the growth of China's life insurance market slowed down in 2020 due to the impact from COVID-19 pandemic, we still believe that China's life insurance industry will maintain a long-term rapid growth trend unchanged. and that the development of insurance intermediaries will be faster than that of the insurance industry as a whole. Second, currently there are various business models in China's insurance intermediary market, including agent-oriented model, business-oriented model, and direct-to-consumer model, with evolving technologies and changing market environment. These business models, on a standalone basis, may face difficulty to maintain enduring vitality over the long term. Only those which can facilitate best customer services, extend customers' life cycle, and enable repeated transactions can thrive and prosper in the future. 我们坚信新战略将成为泛华在2022年及未来高速增长的强大引擎。 Path 3, 2021 marks the first full year for implementing the strategy of professionalization, digitalization, and open platform, which we believe will help build new growth engines for Fanhua for 2022 and beyond.
spk04: FanHua's professionalized, digitalized, and open platform strategy integrates FanHua's original development model to fully improve the output and income of existing agents, and to consolidate the advantages of existing offline transactions and services, and to strengthen FanHua's ability in 2B and 2C, and to build FanHua into a more compatible,
spk03: Our strategy of professionalization, digitalization, and open platform is built upon our existing business model, looking to enhancing the productivity and income of our sales agents. and solidifying our existing strengths in offline sales and service capabilities, while in the meantime, strengthening our capabilities onto B and to C fronts to build Fanghua into an open digital platform with greater compatibility and more growth potential. We believe that this new strategy will enable us to build a sustainable business model with enduring vitality.
spk04: In 2020, we established the Yun Tong Business Department based on professionalization. As of now, we have approved the construction work of three Yun Tong city branch companies. Based on digitalization, we established the Digital Group. Fanhua Digital Business Center was officially operated at the end of January 2021. Based on open platform, we established the Yun Fu Business Department. In 2020, as part of our plan to professionalize our sales force,
spk03: we have established a interim business division, approved the establishment of three city-level branches. For digitalization, we've established a digital business division, and our digital marketing center has been in operation since the end of January 2021. As for open platform, we've established a cloud service division, which has so far formed a partnership with six cooperative partners and started operating on a child basis. We expect that the new strategy will start to yield more meaningful positive results in 2022 to drive rapid growth of our business in 2022 and the years ahead.
spk04: In 2021, the total amount of money spent will not be less than $1.2 billion. The budget for the new strategy will be $1 billion. The net profit will not be less than $3 billion. In 2021, the total amount of money spent will not be less than $3 billion. The net profit will not be less than $1.2 billion. We believe The new strategy will create greater value for the company in the future, and thus bring greater returns to shareholders.
spk03: Fourthly, financial forecast for 2021. Looking ahead to 2021, we expect gross return premiums of our regular life insurance business to be no less than $12 billion. The initial investments for carrying out the new strategy in 2021 include is expected to be around 100 million RMB. Therefore, our operating income is expected to be no less than 300 million RMB in 2021. For the first quarter of 2021, we expect our regular life insurance, GWP, to be no less than 3 billion RMB and operating income no less than 120 million RMB. We believe that the new strategy will contribute greater value to the company and generate higher returns to our shareholders over the long run.
spk04: Fifthly, dividend plan. The company is committed to maintaining a regular cash dividend policy. Based on our earnings expectations,
spk03: and the amount of expenditure required for enhancing our professional and digital capabilities in 2021. Annual dividends for 2021 will be no less than $0.6 USD per ADS, payable in full quarterly installments, with $0.17 USD per ADS for each quarter. Thank you. This concludes my presentation. Now the floor will open for your questions.
spk02: Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for a name to be announced. If you wish to cancel the request, please press the found your hash key. Again, for those who would like to ask questions, please press star 1 on your telephone and wait for a name to be announced. Ladies and gentlemen, for those who would like to ask questions, please press star 1 on your telephone and wait for a name to be announced. Our first question comes from the line of Xingxing Mao from CICC. Please ask your question.
spk01: Hello, everyone. I'm Xingxing Mao from CICC. I have two questions for Guan Licheng. One is, is the growth of E-Tipo in the company better than before? Is it affected by the change of the key definition? The other is, how is the sales of new products after the change?
spk03: Two questions from . The first question is regards our guidance on the GWP of our regular life insurance business in the first quarter, which sounds quite strong growth. She's wondering whether this strong performance is due to the transition of the critical illness definition framework. And after the new critical illness framework takes effect in February the 1st, how's the sales of the new critical illness products so far?
spk04: Firstly, in the first quarter, after the new critical illness framework take effect,
spk03: The jumpstart sales campaigns in the first quarter in the industry has actually been performing pretty well, largely thanks to the transition of the critical illness framework transition. And as for Fanhua, we believe that we have been outperforming the industry
spk04: The second question, which is related to the first question, is that this industry often has an extreme product switch period under the influence of a major product and policy. This switch is actually some of the common habits and practices of an industry. The practices are also quite mature. It has been an industrial norm that each time after a major regulation or a policy issue,
spk03: which resulted a change to insurance products. It will have, of course, a huge impact on the industry. And we do expect that after the transition of the critical illness framework, it will probably take the industry some time to fully recover. We have been proceeding with the transition of the products as scheduled, and we've been making preparation for our next marketing campaign, which is in April and May. For the next marketing campaign, our major products will focus on annuity and whole life products, while we will also make efforts to educate our customers on the new critical illness products.
spk04: Thank you.
spk03: Thank you.
spk01: Thank you. Thank you.
spk02: Again, for those who would like to ask questions, please press star 1 on your telephone and wait for a name to be announced. Again, for those who would like to ask questions, you may press star 1 on your telephone and wait for a name to be announced. Ladies and gentlemen, it is star 1 to ask for questions. There's no more questions at this time. Our speakers, you may continue.
spk03: Thank you for joining us on today's conference call. If you have any further questions, please feel free to contact us. Thank you.
spk02: Ladies and gentlemen, this concludes the conference. Ladies and gentlemen, this concludes today's conference call. Thank you for participating.
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