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spk05: Thank you for standing by for FANWA's first quarter and first half 2021 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 would like to ask a question. For your information, this conference Call is now being broadcasted live over the Internet. Webcast replay will be available within three hours after the conference is finished. Please visit FONWA's IR website at ir.fonwaholdings.com under the Events and Webcasts section. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd like to turn the meeting over to your host for today's conference, Ms. Oasis Kew, FundWars Investor Relations Manager.
spk04: Good morning and good evening. Welcome to our second quarter and first half 2021 earnings conference call. The earnings results were released earlier today and are available on our IL website as well as on Newswire. 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 the 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 includes but not limited to those outlined in our filings with the SEC, including our registration statement on Zoom 20F. We do not undertake any obligation to update this forward-looking information, except as required under the applicable law. Joining us today are our Chief Executive Officer and Chairman of the Board, Mr. Chun-Ling Wang, Chief Financial Officer, Mr. Peng Ge, and Board Secretary, Lily Li. Mr. Wang will provide a review of our financial and operational highlights in the second quarter and first half of 2021. There will be a Q&A session after the prepared remarks. Now I will turn the call over to Mr. Wang.
spk01: Good morning and good evening. Thank you for participating in today's conference call. On the one hand, the pandemic has had a profound impact on the national economy and business activities, directly or indirectly leading to a decline in the consumer confidence and purchasing power of middle-class families. Many industries have gradually
spk04: On the first part, I will talk about our views on the market trends. Firstly, the resurgence of COVID-19 has brought a far-reaching impact on China's economy and business activities, directly or indirectly hurting consumer confidence and chasing power of the middle-class families. Many industries have been drastically impacted, and the insurance industry was certainly not immune.
spk01: As an important part of insurance sales, the future is broad. In the past, the development of the professional insurance medium only laid the foundation for the future development of the medium. And the COVID-19 epidemic will accelerate the development of the professional medium. The proportion of the professional insurance medium market continues to increase. It is an irreversible trend.
spk04: Even so, we are firm believers that challenges and opportunities coexist. We still believe that there is tremendous room waiting to be explored in China's life insurance market in the long run, and that professional insurance intermediaries, as an important insurance distribution force, still enjoy huge growth potential. The progress made in the past in the professional insurance intermediary industry was only to lay the foundation for future development, and COVID-19 is expected to speed up the development of the industry. It is inevitable and irreversible that the market share of professional insurance intermediaries will continue to increase.
spk01: However, with aging, Chinese middle-class families' demand for commercial nursing, long-term pension, and other products will continue to grow. This will open up a huge South China Sea market. And to dig and satisfy the core of this part of customer demand is to build high-quality sales teams and through digitized movement of customer demand,
spk04: Thirdly, health insurance market is getting saturated and growth is expected to slow down in the next stage. However, with an aging population, the demand of Chinese middle-class families for commercial pension insurance and long-term annuity is expected to continue to grow. and thus opens up a huge blue ocean market. The key to cultivating and meeting such demand is to build a high-quality sales force, gain customer insight through digital intelligence, and provide customers with a variety of customized products according to their individual needs, thus prolonging customer lifecycle.
spk01: Yes, we believe that. Fourthly, we firmly believe our strategy of professionalization, digitalization, and open platform
spk04: we prepared as well to seize the new opportunities emerging from the market changes. Hence, we will stay committed to pushing forward our strategy.
spk01: On the second part, I will give a review of our financial results in the second quarter and first half of 2021. 2021年第二季度,受险行业总保费规模出现大幅下滑,同比下降16.6%。 Live insurance industry witnessed a sharp decline in total gross return premiums by 16.6% in the second quarter of 2021. 2021年第二季度,范华实现受险总保费规模24.6亿元,
spk04: Against the industry headwind, Fanhua managed to record 2.5 billion RMB worth of total life insurance, GWP, representing a positive growth of 4.9% year-over-year, with operating income reaching 51 million RMB. higher than expectation in the second quarter of 2021. As compared to only 0.4% year-over-year growth in total life insurance GWP in the industry in the first half of 2021, Fanhua registered 5.5 billion RMB in life insurance premiums, up by 16.9% year-over-year, and 191.4 million RMB in operating income meeting nearly two-thirds of our target for 2021. 第三方面,泛华职业化、数字化开放平台战略各项工作进展顺利。 And the third part would share the progress that was made in our strategy of professionalization, digitalization, and open platform strategy. And we have made encouraging progress.
spk01: Firstly, in terms of professionalization,
spk04: we approved the establishment of 14 interim branches, among which nine are in the preparatory stage for opening. Over 100 interim advisors have been recruited after multiple rounds of rigorous checks and assessments.
spk01: 二,数字方面,二季度上线了数字资产管理平台, 容数助力数字运营平台,DOP, 以及 Secondly, in terms of digitalization, we rolled out three major digital tools in the second quarter of 2021, i.e., digital asset management platform,
spk04: Roam's digital operating platform and Roam's Guanjia. The key value of using these digital tools is in helping team leaders with managing teams more efficiently and in empowering agents to better engage clients based on data-driven insights and digitalized operations. 我们五月启动了在河北开展数字化工具列装试点。
spk01: There are about 8,000 agents who have installed FanHua QIWI. More than 2,000 FanHua agents have registered to become digital assets owners. At the same time, more than 40,000 customers have been connected through QIWI. Through the promotion and digital operation of digital tools, the existing organizers and customers have been well-managed. To manage the subsequent teams and customers,
spk04: We apply new digital tools in Hebei Province on a pilot basis since May, with about 8,000 agents installing our WICOM and over 2,000 registering as digital asset originators and connecting to more than 40,000 clients through WICOM. Should digital ties and operations have significantly helped mobilize our existing sales force and connected clients, laying a solid foundation for further team management and client operations.
spk01: Using on our experience in the Huawei Pilot Zone, we plan to roll out digital tools among our frontline sales force on a wider basis and implementing a new development model
spk04: to expand our entrepreneurial sales teams, but by digital empowerment, i.e., to digitize offline operations through recon-based online chat group operations, so as to assist our team leaders to manage their team activities more efficiently and professionally, while empower our agents to better engage with their clients in a professional manner.
spk01: The company is actively preparing for the end of the year and opening up. It is expected to complete the operating profit of more than 100 million yuan in the second half of the year, and achieve 300 million yuan of operating profit throughout the year.
spk04: We expect our new business for the third quarter of 2021 to grow on a quarter-over-quarter basis, while operating income expected to be no less than 25 million RMB, with increased spending on implementing our income plan and promotion of digitalization initiatives. In the meantime, we will spare no effort to run up sales in the last quarter to achieve our full-year sales targets. and geared up for the Jumpstart sales campaign for 2022. Operating income expected to exceed 100 million RMB for the second half of 2021 and no less than 300 million RMB for 2021.
spk01: Fifthly, our dividend plan for the second quarter of 2021. 2021年第二季度現金分紅為每成托股0.15美元。 股權登記日為2021年9月7日。 分紅將在2021年9月23日前後派發。 Our quarterly dividend for the second quarter of 2021 is $0.15 per ADS.
spk04: The dividend is payable on or around September 23, 2021 to shareholders of Red Quote on September 7, 2021. Thank you. Now the floor will open for your questions.
spk05: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, Press the pound or hash key. Please stand by while we compile the Q&A roster. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for a name to be announced. Your first question comes from the line of Alan Sun from Morgan Stanley. Please ask your question.
spk03: Good morning management. I just have two quick questions. First, what is the impact of the so-called double recording practice on offline insurance sales. And secondly, could you just quickly comment on the new sales trend of critical illness products as well as savings-type products since the third quarter of this year? Thank you.
spk01: Thank you. First of all, As Fanhua, we are very welcome to this industry to implement dual road. Because dual road to the entire industry, and some of the black market that hit this industry, has a very positive effect. In a way, it can stop this kind of sales misconduct. So Fanhua is very welcome to this, Second, in the short term, double-way should have a certain impact on sales, but in the long term, it should be greater than B. At the same time, it should be said that higher requirements have been raised for the management of insurance intermediaries, which also allows the entire industry to strengthen its strength, conscience and competitiveness.
spk04: Firstly, from FunFast's perspective, we welcome this new regulation. We believe that it will help to standardize the operation in the industry and help to reduce malicious policy cancellation and reduce sales misrepresentation. And then secondly, Short-term-wise, there may be some adverse impact, but from long-term perspective, we believe that the benefits will be much larger than the adverse impact. And certainly, this regulation will also pose higher requirements for professional insurance intermediaries to standardize their operations, and it will help to improve the quality of the
spk01: professional insurance and community sectors as a whole.
spk04: 雙路對規範的有實力的保險中介企業一定是利好的。 We believe that this double recording requirement is a positive for those companies who have already more standardized operations and have this strong capability.
spk01: The second question is about the issue of heavy-duty and storage insurance. It should be said that in the past, the development of insurance in China was mainly based on the traditional gold-plated insurance organization model. And this organization model is more focused on the industry. So the industry organization is more focused on the professional insurance products In the past, as life insurance sales organizations
spk04: are organized in a pyramid structure, and a lot of the sales agents are actually working as a sales agent on a part-time basis. So not a lot of them have strong abilities in the sales skills. So critical illness, which is relatively easy to sell, became the major products for professional insurance intermediaries. And as a result, the penetration rate of critical illness products has been quite high in China.
spk01: Therefore, we expect that the room for further development for critical illness products will be quite limited. 那未來的市場一定是基於中國超過4億的中產階級對保險的需求。 這部分保險的需求應該是基於中產階級,基於家庭市場配置的需求。 And we believe that the border market will come from the demand from the 400 million middle-class families for diversified family assets allocation solution. Such demand opens up a new blue ocean market, but such demand will also require the services of more professional sales agents.
spk04: and which, who will be able to offer customized products for the clients based on the individual needs.
spk01: 因此法華接下來的市場的核心定位就是基於這4億中產階級的家庭中產配置。 這個定位之後我們將以儲蓄性保險為核心。 So therefore our future
spk04: market propositions and all our major focus will be to meet the demands of this 400 million middle class for family asset allocation plan. Therefore, we are going to actively pursue customer innovation and product customization to make sure that in the future these customized products will account for a majority of our sales. On August 26, we're going to host a new product launch conference or a customized product, a whole life insurance product, which is called Huading No. And this product will be officially launched to the market in September. and which will be our major products in September.
spk01: We already established cooperation agreements with six reinsurance companies.
spk04: So in the future, we will work with both reinsurance companies and insurance companies to customize and design products for our customers. Thank you.
spk05: Your next question comes from the line of Zixin Wang. Please ask your question.
spk02: Hello, this is Guan Lixeng. Can you hear me? Yes, very clear. Hello, I'm Wang Ziqian, an analyst at Zhongjin. First of all, congratulations to Guan Lixeng and the company for achieving a growth in the super industry in the first half of this year. I have two questions to ask. The first is about our product structure. What is our current product structure like? What is the ratio of annual heavy-duty risks? What are the changes from last year? The second is our future strategic development strategy. Okay, I will repeat my questions in English. First, congrats to the company and management for the higher than industry growth in the first half. Here are my two questions. The first one is about the product mix. What if our current product mix say the proportion of annuity, critical illness, and life insurance? And is there any change compared with the previous year? And next question is about the regional strategy. which provinces or cities are our main targets, and which group of people are our target customers? Thanks.
spk01: According to the 20-year standard, we will receive 49%, 43%, and 6% of the annual salary. Compared to last year, we received 19%, 69%, and 9% of the annual salary. According to the standard, we will receive 49% of the annual salary. By 20-year APE, whole life insurance, critical illness, and annuity represented 49%, 43%, and 6% respectively, compared to 19%, 69%, and 9% respectively in the same period last year.
spk04: And by first-year premiums, whole life insurance, critical illness, and annuity represented 69%, 20%, and 7% respectively, as compared to 31%, 45%, and 14%.
spk01: I believe that there were two major factors.
spk04: Firstly, in the first quarter, there is the transition between the new critical illness definition with the 01. And after the transition, we believe that the critical illness products are not as good as the 01. And so therefore, the demand for critical illness has weakened after the transition.
spk01: Secondly, I believe there is already a market consensus that Crisco Unis product has reached a significant high level.
spk04: So the major market for future will be the savings products.
spk01: 因此接下来我们认为中级险的增长会放缓, 而储蓄内的保险会逐渐 加大增长趋势。 So we believe that critical illness growth will slow down while savings products will continue to grow. But of course, it will also take time for the savings product to achieve explosive growth. 谢谢。 Thank you. 问了第二个问题是吧?
spk05: There are no further questions at this time. I would like to hand it back to today's presenters. Please continue.
spk04: Operator, we haven't covered the second question yet. Hold on.
spk05: Okay, sure.
spk01: The second question is about our overall development area. We should say that today we have more than 400 million middle-class people. Most of them are still based on urbanization. So, based on the positioning of this market, Fanhua's clear direction is urbanized and business-oriented. In this respect, Fanhua will use digital and professionalization to drive the market. Most of the 400 million middle-class families live in urban areas. Therefore, our strategy has always been urbanization and at least our focus.
spk04: And as we mentioned, we're going to implement our digitalization and professionalization strategies. And the major market for us to implement this strategy will be the major cities.
spk01: We hope to have more than 25 cloud-based branches by the end of the year.
spk04: We have two strategic priorities. Firstly is the development of entrepreneurial sales teams by digital empowerment. We hope that we can attract more and more elite sales agents to join our sales force. And secondly, the second priority is our intern plans. As we mentioned just now, we have approved 14 intern branches. and we expect to have 25 Yuntong branches by the end of this year.
spk01: These Yuntong branches will be mainly located in first tier cities including Shanghai, Beijing,
spk04: and Guangzhou, Shenzhen, as well as provincial capital cities. So far, we have made good progress. Thank you. Hi, Karine.
spk05: Yes, there are no further questions at this time. I would like to hand the conference back to today's presenters. Please continue.
spk04: Thank you for participating in today's conference call. If you have any further questions, please feel free to contact us. Thank you. Hello? We can conclude this call.
spk05: Yes, this concludes today's conference call. Thank you for participating. You may now disconnect.
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