This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: Thank you for standing by for FONWA's third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent background noise. After the management prepared remarks, there will be a question and answer session. Please follow the instruction given at the 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 FunWAS IR website at ir.funwasholdings.com under the event and webcast section. Today's conference is being recorded. If you have any objections, you may now disconnect this time. I would like to turn the meeting over to your host for today's conference, Ms. Oasis Kueh, FundWise Investor Relations Manager. Thank you. Please go ahead.
spk05: Good morning. Welcome to our third quarter 2021 earnings conference call. The earnings results were released earlier today and are available on our IR website as well as our news file. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the US 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 SEC Commission, including our registration statement on Firm 20F. We do not undertake any obligations to update this forward-looking information, except as required under applicable law. Joining us today are our Chief Executive Officer, Mr. Chen Lin-Wang, Chief Financial Officer, Mr. Peng Ge, and Board Secretary, Li Li Li. Mr. Wang will provide a review of our financial and operational highlights in the third quarter of 2021. There will be a Q&A session after the prepared remarks. Now I will turn the call over to Mr. Wang. 大家好,非常感谢大家参加今天的季报会议与市场研判。
spk04: Although China's economy has maintained a steady recovery, the economic recovery of various industries is not balanced due to the impact of epidemic protection and the control measures of the Red Cross. Because the economic expectations are not clear, the public's consumer confidence is insufficient, and the risk is the need for non-strictness. Consumers are generally optimistic.
spk06: Thank you for participating in today's earnings call. First off, market assessment. Despite a steady recovery in the Chinese economy, economic recovery across industries has remained unbalanced due to COVID-19 surges and macroeconomic control measures. Due to concerns over macroeconomic uncertainties, Consumer confidence has not yet recovered fully, especially for products such as life insurance that are not considered to be imminently needed. As a result, the life insurance industry is still struggling to bounce back in a short time span. 四月二十二号,原保监会花布袋。
spk04: The announcement about the further planning of insurance agencies and Internet life insurance businesses has become a hot topic in the industry. The essence of the new rule is to return to the offline market and strengthen the financial and legal management. Therefore, it can be foreseen that there are many online shops in offline institutions.
spk06: Second, the notice on further regulating the Asian life insurance business of insurance institutions referred to as the new regulation issued by China Banking and Insurance Regulatory Commission or CBIRC on October 22nd has become a trending topic in the industry. The rationale behind the new regulation is to refocus on offline insurance distribution and strengthen compliance. Insurers and brokers with a large number of offline sales outlets are set to benefit from the new regulatory change and usher in broader development opportunities.
spk04: It is well proven that Fan Hua is correct in carrying out the strategy of professionalism
spk06: professionalization, digitalization, and open platform, and in advancing the development model with positioning of catering to the demand of 400 million middle-class families for family asset allocation services. We will thus unswervingly continue down this path with an all-out effort. 二,2021年第三季度繁华业绩符合预期。
spk04: In the third quarter of 2021, the industry's risk-saving total security scale continued to decline, with a negative growth of 1.9%. In the third quarter of 2021, in the face of industry depth adjustment, Fanhua achieved a total security scale of 27.1 billion yuan, with a growth of 8.9%. The operating profit reached 2816.3 trillion yuan, exceeding expectations.
spk06: Second, Fanhua's performance in the third quarter of 2021 met expectations. China's life insurance industry witnessed a continued fall in total insurance growth written premiums, or GWP, in the third quarter of 2021, with a negative growth of 1.9% year-over-year. Amid deep industrial adjustment, Fanhua managed to record 4%. 2.7 billion RMB worth of total GWP in the third quarter of 2021, representing a growth of 8.9% year-over-year, with operating income reaching 28.2 million RMB, higher than expectation. 二零二一年前九个月,受限行业总保费同比负增长,
spk04: Total life insurance in the industry
spk06: suffered a negative growth of 0.1% year-over-year in the first nine months of 2021. Despite this, Fanhua registered 8.4 billion RMB in total insurance premiums during the same period, a higher-than-industry growth of 13.7% year-over-year, and 219.6 million RMB in total operating income. meeting nearly 75% of the target for 2021.
spk04: Third, Fan Hua's strategy of professionalization, digitalization, and open platform went well underway in the third quarter of 2021.
spk06: We saw encouraging progress in professionalization. we have approved the establishment of 22 yuntong, or literally translated as Cloud Phoenix 3, branches or business units, among which Shenyang Business Unit and Chongqing No. 1 Business Unit were already open for business at the end of October. By the end of October, we have recruited 180 yuntong advisors and over 40 yuntong financial planners.
spk04: The goal of building a group was achieved in advance. The original goal was to complete 10,000 digital start-ups on November 30, but by November 23, 1.2 million digital start-ups had been completed. At present, Fanhua has entered the community operation stage of digital start-ups.
spk06: We completed the target of building 10,000 digital entrepreneurial teams well ahead of schedule. We had expected to accomplish this target by November 30th, but as of November 23rd, we already built over 12,000 teams. Currently, we are at the stage of operating online chat groups for digital entrepreneurial teams to drive conversion.
spk04: Fanhua's product innovation and design results are significant. As of now, Fanhua has cooperated with insurance companies and other insurance companies to launch 12 exclusive customized products, including Huabai No. 1, Huading No. 1, Huacheng Guard, Huaxiaozhu, Fan Yongheng, and so on. These products are covered with life-threatening, critical risk, regular risk, and million-dollar medical care. The sales channels cover both top and bottom lines. The whole purpose is to meet the needs of customers in terms of health, pension, asset inheritance, and so on. At the same time, Fanhua is more closely linked to the cooperation between insurance companies through the strategic strategy of customized products. We expect that in the third quarter of 2021,
spk06: We are also encouraged by remarkable results from our product customization strategy. As of late, Fanhua, together with insurers and pre-insurers, has co-launched 12 exclusive customized products, including Huabai No. 1, Huading No. 1, Huacheng Guardian No. 1, Hua Xiaozhu No. 1 and Fan Yuanheng. These customized products sold online and or offline range from whole life, term life insurance, critical illness annuity to million yuan medical insurance, providing all-round diversified choices to meet customers' demand for health care, pension, financial legacy management, and so on. The customization strategy also enables us to establish closer bond and expand mutual reliance with our insurance company partners. In the third quarter of 2021, customized products are expected to contribute over 30% to our total new policy sales.
spk04: Fourth, business outlook for the fourth quarter of 2021.
spk06: Looking ahead to the fourth quarter of 2021, we see both challenges and opportunities. Fan Hua will remain focused on the execution of our growth strategy and get prepared for this jumpstart sales campaign 2022 to achieve our four-year target for 2021 while winning a good start for 2022. Hello, everyone.
spk04: For the Jump Start Sales Campaign 2022, our management and operations teams at all levels have made thorough preparations. One, sales force geared up. More than 12,000 digital entrepreneurial teams, all the financial planners and business unit, approximately 60 channel partners of our cloud service division and
spk06: have all been mobilized to join the upcoming year opening sales campaign.
spk04: 我們預計開幕紅將有超過70%的業務來源於繁華創新定制產品。 Abundant product supply.
spk06: A total of 12繁華 exclusive customized products will be available for the campaign. These products include offline and online popular products, each with outstanding advantages. It is estimated that 70% of the business during the campaign will come from Fanhua's customized products.
spk04: 运营保障有力。 我们建立从集团到第四的四级运营团队, 通过数字化工具,包括 Fanhua Qiwei, 榕树EOP, 榕树管家等等, 为数字创团和联通队伍, Strong operational support. We have established a four-level digital operation system from the group to city level.
spk06: and started empowering digital entrepreneurial teams and yuntong teams through digital tools, including Fanhua Wecom, ROMS DOP, or Digital Operating Platform, ROMS Guanjia, et cetera, supported by various targeted training programs. Kickoff meetings at different levels are also ready to go, including live streaming of the kickoff conference which will be graced by a few distinguished guests and is expected to attract over 100,000 audiences.
spk04: Together with our insurance company partners,
spk06: We will jointly roll out unprecedented sales incentive programs, including but not limited to 12 levels of prizes and tickets to a summit that we intend to host in Macau for top sellers. 我们预计2021年第四季度经营利润预计在8000万左右,全年完成3亿经营利润的目标。 Operating income is expected to hit 80 million RMB for the fourth quarter of 2021 and 300 million RMB for 2021.
spk04: 5. Dividend plan for the third quarter of 2021. The quarterly dividend for the third quarter of 2021 is $0.15 per ADA.
spk06: The dividend is payable on or around December 22, 2021 to shareholders of record on December 8, 2021. Thank you.
spk04: Now I would like to take your questions with Mr. Ge and Ms. Lee.
spk05: Operator, we are ready for the questions.
spk01: Thank you so much. Ladies and gentlemen, we will now begin the question and answer session. As always, if you would like to ask a question, you just have to press star and 1 on your telephone keypad. Again, it's star and 1 if you wish to ask a question. And our first question comes from the line of Zijuan Wang from CICC. Your line is now open.
spk03: Hello, Manager. Can you hear me?
spk04: Yes, thank you.
spk03: Hello, I'm Wang Ziqian, an analyst from Zhongjin. First of all, I'd like to congratulate the company and the management team for achieving a good job in the industry. I have two questions I'd like to ask. The first one is about our team. Can you please share with the management team more about the potential of our top managers and our new recruiters, especially the potential of the digital creation that you just mentioned? Secondly, we mentioned in the report that the Internet Insurance Agency recently established a good offline economy from the company's point of view, because the small and medium-sized enterprises may be forced to reduce the long-term supply of the Internet channel. Has the company seen a change in the trend of our product supply chain? Or is there a more specific outlook for such a good company? For example, how much impact will it have on our new unit prepayment and commission rate? Thank you. Let me briefly translate my question. I have two questions. First, could you please introduce more about the productivity of top sellers and new hired brokers? And second, company mentioned that the tightening of online insurance might benefit offline brokerage intermediaries. Have we seen any change of product suppliers of our company since small and medium-sized insurance companies are forced to reduce the supply of long-term insurance? And could you Could you provide more details about the influence, say the expected influence of FYP and the commission rate? Thank you.
spk04: The total number of people who have been deported is about 1.7 million. The total number of people who have been deported is about 1.7 million. The total number of people who have been deported is about 1.7 million. The total number of people who have been deported is about 1.7 million. The total number of people who have been deported To get back to you on the first question, at the end of the third quarter, our registered sales agents amounted to about 300,000, and in the third quarter, performing agents
spk05: amounted about 60,000, of which about the number of performing agents for life insurance is about 17,000. And in the first nine months of 2021, the performing agents for life insurance amounted to about 50,000 in total. As for the productivity of top sellers who are defined as those who have contributed over 10,000 APE on 20-year basis. Their average, the monthly average APE contributed by the top sellers were about 26,000 on a monthly basis in the third quarter. 关于我们现有组织加数字创传,
spk04: In fact, we are more likely to influence people who take advantage of it to join FANHUA. This is a new logic of community operation and organization development. From the current perspective, the effect is still very obvious. I believe that the existing organization and digital startup of FANHUA based on retail separation next year will affect more people who take advantage of it to join FANHUA.
spk05: As for our Salesforce, our current strategies are focused on our existing Salesforce, plus additional contribution by our digital teams, as well as Yintong Salesforce. As for our existing teams, we are establishing digital entrepreneurial teams to attract elite sales agents to join FanHua. And we are leveraging on the WICOM-based online chat groups model to expand ourselves organization. And this strategy has been quite effective, as we can see in the quarter results. And we expect that this digital entrepreneurial plan will help attract more top agents to join FANHUA in 2022?
spk04: FANHUA's professional development is going smoothly. The Yun Tong Project has now formed a very good reputation and transmission in the industry. There are a lot of industry elites who are considering or entering FANHUA. In this regard, there are a lot of interviews and interviews. In fact, we have made a lot of choices. At present, it is consistent with the business quality that we expect. At the same time, our Yun Tong will open the door to war. Through the opening of the door, we will review our past achievements. Through this achievement, we will reverse it to recommend On professionalization strategy, we have made good progress on this part. Our wind farm plant has established a good reputation in the industry.
spk05: And as far as we know, a lot of top salespeople in the industry are thinking to join San Juan. And we have done quite a lot of interviews in the past couple of months. And the presence that we have interviews have good qualities, which are basically in line with our expectations. And we expect our Wintone teams will join the John Starr Self-Compense, which will be a good opportunity for us to vindicate the actual results of this Wintone plant. And on the basis of this, we will further optimize our professionalization strategy and will continue to push forward this plant going forward.
spk04: The second aspect is about the new rules of the Internet. We have studied and interpreted the new rules of the Internet from various angles. In general, we believe that the nature of the new rules of the Internet is to return to the phenomenon, to return to the nature of the rule of finance. Therefore, the new rules of the Internet The insurance companies and the intermediaries will have a better opportunity this time. At the same time, the insurance companies that have fewer online sites have been driving the Internet business in the past, but now they have returned to the offline nature. So their demand for intermediary business will be more and more abundant, or will be more and more important. For example, it is said that the insurance companies with the least net points in the world, the Internet business department in the past seems to be starting to transform now, and the main functions are switched to the cooperation of the insurance intermediaries.
spk05: And the second question regarding the new regulation on online life insurance distribution, we have done a lot of studies and interpretations on this new regulation. We believe that the nature of this new regulation is to refocus on offline distribution and refocus on financial compliance. And we believe that this new policy, this new regulation will provide a lot of good opportunities for insurance companies and insurance intermediaries with a larger geographical reach and a larger number of sales outlets. As for those insurance companies with limited offline network coverage, in the past they have mainly drive their business through online distribution channels. After this new regulation, a lot of them will be compelled to return to offline distribution, and the demand for intermediary channels will be a lot higher. For example, as far as we know, some of the insurance companies with limited offline sales has decided to restock their internet business unit into a unit that focuses more on cooperation with independent insurance agency channels. 因此我們有理由堅信,接下來保險公司專業中介,特別線下機構比較廣覆蓋的這些中介,
spk04: Therefore, we believe that insurance companies with limited
spk05: coverage will strengthen cooperation with independent insurance intermediaries with a larger geographical bridge and step up cooperation in terms of innovation on product customization in services, business operation, as well as marketing strategies. 方法也會主動與保險公司形成合力來
spk04: to adapt to these new changes, and hopefully help Fanghua and insurance companies to pursue further business development. Thank you. Thank you.
spk01: Thank you so much. And your next question comes from the line of Alan Peng from Morgan Stanley. Alan, your line is now open.
spk02: Hello, Guan Licheng. This is a very quick question. I saw that these two days, Beijing and Henan's local insurance agencies have launched some measures This is Alan from Morgan Stanley. I just have one quick question. We see that the CBIRC bureaus in Henan and Beijing in the past couple of days have issued refreshed regulations on the insurance intermediaries, particularly in Henan. The regulators aim to limit the development of the so-called MGA, the managing intermediaries, general agency model within its jurisdiction. I just want to hear what management has to comment on this latest development. Thank you.
spk04: For us, profit is greater than money, which is also a good profit. As I said, Fanhua has always insisted on the core of the sales organization. Fanhua's sales organization is based on the existing organization and digital innovation and professionalization organization. These two organizations become the standard direction of our overall development and stick to the operating strategy. In the past, whether it was the Internet or the MJ, they were all some new products of various industries. These products have now been suppressed. It should be said that this method has basically no effect, and it is very good. Because whether it is the business of the Internet or the MJ,
spk05: Thank you for the questions. We have also noticed the new policies issued by the Henan CBRC Bureau, and we believe that this new policy provides more opportunities than than challenges. And it's, in general, more positive for Ban Hua. As I mentioned, our sales force consists of our existing sales organization, digital teams, as well as intern teams, which will form the backbone for our business development. As for the internet business for the MGA business model, These are somewhat new practices in the industry. And for Fanhua, we have done some attempts in launching this new area, but the percentage of the total business is still quite limited. Therefore, the impact for us will be quite limited as well. restrictions on these new practices will be quite positive for us in general.
spk04: And we will take the initiative to work with these platforms, and we will take the initiative to develop them. They should all become a part of our rapid growth.
spk05: And due to this regulation changes, a lot of companies which used to adopt this MGA model or operate internet insurance sales, I think there will be opportunities for us to consolidate their sales teams or their customers. As of today, we have about 800 sales outlets. we would take advantage of this sales network and adopt a proactive approach to pursue cooperation with these companies or to consolidate the resources from these companies to provide further business development. Thank you.
spk01: Thank you so much. Once again, ladies and gentlemen, if you wish to ask a question, it's star and one on your telephone keypad. Again, if you wish to ask a question, it's star and one on your telephone keypad. There are no further questions at this time. Speakers, you may continue.
spk05: Thank you for participating in today's conference call. If you have any follow-up questions, please feel free to contact us. Thank you.
spk01: Thank you, and that does conclude our conference for today. Thank you for participating. You may all now disconnect.
Disclaimer