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spk01: Thank you for standing by for FANUWA's fourth quarter and fiscal year 2021 earnings conference call. At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent any 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 FANUA's IR website at ir.fanuaholdings.com under the Event 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 Chiu, Vanuatu's Investor Relations Manager.
spk04: Good morning and good evening. Welcome to our fourth quarter in fiscal year 2021 earnings conference call. The earnings results were released earlier today and are available on our IR 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 those 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 Serm 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 Chairman and Chief Executive Officer, Mr. Yi-Nan Hu, Chief Financial Officer, Mr. Peng Ge, Mr. Hu will provide a review of financial and operational highlights in the first quarter in fiscal year 2021. There will be a Q&A session after the prepared remarks. Now, I will turn the call over to Mr. Hu. Hello, everyone.
spk03: I am Hu Yilan. Thank you very much for attending today's press conference. I would like to talk about 我对行业的现状和未来发展趋势的一些看法, 在谈谈范华2022年的经营思路和重点工作。 Good morning and good evening.
spk05: This is Yi Nan Hu. Thank you for joining today's conference call. I would like to begin the call by sharing some of my thoughts on current industry trends. Then I will discuss our strategic focuses in 2022.
spk03: In 2021, China's health insurance industry has shown a high-level and low-level health insurance. After the new and old heavy-duty definition has been changed, the number of health insurance increases from the beginning of the year continues to decline. The annual health insurance total health insurance has shown a negative growth. The repeated impact of the epidemic has been one of the reasons for the control last year. In 2021, China's life insurance industry started off well but ended up on a downward track. Premium growth continued to slow down after the transition to the new critical illness definition framework in the first quarter of 2021.
spk05: and gross written premiums for GWP dropped year over year. The resurgences of COVID-19 and tightened regulations clearly played a role, but we believe the major cause lies in the supply side, as neither the quality of insurance products nor the professional capabilities of insurance sales agents can fully meet customer needs. 在保险行业的转型期,
spk03: Thank you very much. asset protection, tax planning, and asset transfer will become the main needs of this type of population. At the same time, from the experience of the mature market, with the rise of the middle class and the increase in the level of income of residents, residents will gradually become more and more satisfied with the basic insurance, mainly upgraded to a comprehensive family asset configuration. Against the backdrop of industry transformation, despite mounting challenges, we also see tremendous opportunities.
spk05: People reaching the retirement age are expected to grow from 9 million in 2021 to 25 million in China. More than 25 million people are expected to retire in the next 10 years each year starting from 2022, adding up to 300 million people. With an accelerating aging society, there is burgeoning demand for elderly care, asset preservation, tax planning, and legacy management among soon-to-be retirees. Meanwhile, based on experience learned from mature markets, with the rise of the middle class and the increase in consumers' disposal income, more and more people are shifting their demand for insurance from ensuring basic protection to more comprehensive plans for family-based asset allocation. These changing consumer demands are driving the next era of strong growth. but such demands require salespeople to be equipped with higher capabilities and more professional knowledge.
spk03: 从过去几年,行业和饭法的数据也印证了这个趋势。 Statistics from both the industry and 饭法 in the last few years also confirm this trend. 从保费结构来看, The sales of heavy-duty shoes in the industry have continued to slide since the new rules of heavy-duty shoes in 2021. It is also the case for clothing. In the past year, the new rules of heavy-duty shoes have brought a trend of overall decline in new orders. In the first quarter of last year, From the premium mix perspective, critical illness sales have suffered a continuous decline
spk05: after the transition of CI definition framework. The same applies to Fan Hua. For 2021, critical illness sales facilitated on Fan Hua's platforms have dropped quarter by quarter, showing a downward trend in general, with those sales of savings-type products such as whole life insurance and annuity have been on the rise instead, clearly reflecting the changes in insurance demand.
spk03: From the perspective of agents, in the past year, the total number of agents in the Chinese insurance industry fell from 9 million to 6 million. The agent team has shown two levels of evolution. On the one hand, a large number of low-performing agents have fallen out of the industry. On the other hand, the high-performing human resources team is more stable, and the capacity continues to rise. From the point of view of self-development, Although Fanhua's total number of agents and the total number of new employees continue to decline, Fanhua's annual new employees are more than 100,000. From 3,230 in 2018 to 5,432 in 2021, Fanhua's annual new employees are more than 100,000. From 3,230 in 2018 to 5,432 in 2021, Fanhua's annual new employees are more than 100,000. From 3,230 in 2018 to 5,432 in 2021, Fanhua's annual new employees are more than 100,000. From 3,230 in 2018 to 5,432 in 2021, Fanhua's annual new employees are more than 100,000. To take a look at agents, the total number of agents across China's insurance industry has plummeted from 9 million to 6 million, leaving a polarized sales force.
spk05: as on the one hand, a large number of low-performing agents are leaving the industry, and on the other hand, high-performing salespeople are more stable and productive. From Fan Hua's standpoint, despite a fall in Fan Hua's total numbers of agents and performing agents, the last four years witnessed an increase in the number of Fan Hua's high-performing agents with annual sales. first-year premiums of 100,000 RMB and above, from 3,230 in 2018 to 5,432 in 2021, suggesting a distinctly growing momentum in general. And productivity of our high-performing agents has also grown year by year, as their per capita average annual premiums grew from 250,000 RMB in 2018 to 320,000 RMB in 2021. All this indicates that our agents are also diverging, with Sanhua's core sales force remaining stable and growing in quality. 从客户层面,
spk03: Since 2018, the number of customers who have paid more than 100,000 yuan a year has also shown an obvious growth trend. The number of new customers every year continues to increase. The number of customers who have paid more than 100,000 yuan a year has also shown an increase in the trend. The return rate is over 30%. Customers continue to improve their quality. As for customers, the number of Fanhua's high premium customers with over 100,000 RMB in annual payments has also shown a distinctly upward momentum, as the number of new high premium customers each year
spk05: has been growing and the premiums contributed by repeated purchases have been increasing, accounted for more than 30% of the total. This suggests that the middle class has been rising rapidly and the number of high net worth customers has been increasing as well. 2021年相比行業
spk03: Ren Shunxian's total insurance fee fell by 0.3 percent. Fan Hua's total insurance fee reached 1.15.8 billion yuan, which increased by 12.3 percent. Xin Dan's insurance fee increased by 28.3 billion yuan, which increased by 4.1 percent. Among them, the growth rate of the new single is more than 64%, which once again confirms the change in customer demand and the contribution of high-level and high-performance people to business growth. The growth of the quality of the agents has eliminated the decline in the number, which also proves the future direction of business.
spk05: In 2021, despite the drop of 0.3% in the industry life insurance GWP, Fanhua managed to register 11.6 billion RMB of total GWP, a year-over-year increase of 12.3%. First-year premiums reached 2.8 billion RMB, a year-over-year increase of 4.1%, among which first year premiums of whole life insurance grew by over 64% year over year. This again confirms the changes in customer demand and the contribution of highly productive, high performing sales force to business growth, as well as the fact that the quality improvement of agents are able to offset the adverse impact of downsizing and it also sheds light on FANHUA's future path for development.
spk03: The two data is that further confirming this trend. Firstly, high premium customers with annual premiums of over 100,000.
spk04: annual premiums contributed roughly 34% of our total first-year premiums in 2021. And the number of agents who contributed over 100,000 first-year premiums in 2021 amounted to about 5,000 of them contributed around 65% of our total first-year premiums.
spk03: Based on the judgment of the future trend of the industry, FANHUA's new strategy of comprehensive implementation of professionalization, digitalization and opening up platforms in 2021 will be conducive to the development of the new strategy of professionalization, digitalization and opening up platforms. FANHUA will deeply promote the development strategy of professionalization, digitalization and opening up platforms in 2022, focusing mainly on three areas of work.
spk05: Based on our judgment on the industry, Fan Hua implemented in full strength the new strategy of professionalism, digitalization, and open platform in 2021 in an attempt to fully empower and cultivate professional talent and also empower the industry to take full advantage of the great opportunities brought by the rising demand for elderly care and family legacy management. In 2022, we will further execute the development strategy of professionalism, digitalization, and open platform with a focus on the following initiatives.
spk03: We are focusing on the needs of high-end customers first.
spk05: We plan to tap into high net worth market by offering referral of insurance trust and family trust services with a target to complete over a thousand large ticket family legacy management policies. and increased the amount of premiums contributed by high-value customers who had paid no less than 100,000 RMB premiums annually by 30%. And this is made based on previous judgment on the industry, and we believe that the contribution of high-value customers is on the rise so that we pay our first focus on high-value customers' demands. Our point here is to make sure to meet their demand for family legacy management first.
spk03: Second, as high-performing agents with 100,000 RMB FYP
spk05: contributes about 65% of the total FYP in Fanhua. We will focus on fostering and recruiting more productive agents through professional empowerment, customer resources offering, and digital empowerment to meet the target of 30% growth in first-year premiums contributed by highly performing agents with 100,000 RMB FYP within our existing sales force and Fanhua Yuntong.
spk03: Three, we expect to accelerate the advancement of the open platform strategy
spk05: benefiting from the favorable environment after the new regulations on Internet insurance took effect, through which we look to achieve the target of generating 10% of our first-year premiums in 2022.
spk03: Our goal is to create a new company in the next two years, a digital, professional, and high-growth company. Our goal is to transform Fanhua into a brand new digitalized and specialized company.
spk05: that demonstrates high growth in the next two years. 2022 will be a year of capacity building, laying the groundwork for Fanhua to get back on track for sustained and high profit growth. 下面我们来回答大家的提问,谢谢。 This concludes my presentation, and now the floor will open for your questions. Thank you.
spk01: To ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question. comes from Cezanne Wang of CICC. Your line is open.
spk02: Cezanne Wang of CICC. Your line is open. Now, have you seen that they have become stronger with our cooperation? If so, will it have a certain impact on our performance in 2022? The second question is about the product. The company also mentioned that in 2021, the storage product performance was very bright. I would like to ask the management level to see if this is a short-term change in style, or is it that the security needs of our market have basically reached the top? First, congrats to the impressive results of our management in Q4 and I have two questions. First, First, after the new regulations of internet insurance, so many small and medium-sized insurance companies cannot do online business. Can we see stronger willingness for them to cooperate with us? And will it affect our 2022 performance outlook? And next one is about the product. We can see a rapid growth in the savings-type products. Do we think this is a short-term adjustment, or it is due to that the demand for protection products has peaked? So how could we do better in saving type products? And is the commission rate of saving type sharply lower than that of the protection type? Thanks.
spk04: concerning your first question regarding the impact of the internet live insurance regulations we do observe that a lot of small medium-sized insurance company have more positive attitudes towards cooperating with this as well as designing new products. So we believe that this new regulation is positive to our business development in general. In addition to that, we are observing that the integration between online and offline business has also shown significant progress. After the new regulations, a lot of online channels and who used to distribute their business through internet channels are willing to pursue cooperation with our open platform business as well. Last year, we have generated about 40 million first-year premiums through our open platform strategy. And this quarter, in the first quarter, we have already achieved about 30 million RMB first-year premium. And our target for 2022 is to deliver about 300 million to 500 million first-year premium. So in conclusion, we believe that this new regulation is definitely quite favorable to our development.
spk03: and the ratio of annual salary is actually a very big structural change. In 2020, the total salary was 30, 39, 38, 40. We see that from 2021, our four seasons, four seasons, However, in the first quarter and the previous year, the value of the Chinese zodiac sign is lower than that of the Cancer sign. This means that there has been a significant change in the product structure. In the second quarter and the third quarter of last year, both the Chinese zodiac sign and the Lunar New Year sign exceeded the value of the Cancer sign. I think this is a real reaction to the demand of the market. This reflects the change of the demand of the market. I don't think we can use the term of the peak. I think the peak is likely to enter a relatively slow growth trend. As for Nianjingxian, which is a product that satisfies customers' needs, I think it will become a mainstream product or a major product support in the future. Regarding this situation, we have also clarified our sales method or our sales strategy. We have also made new adjustments based on this. First of all, we define our customer group as people in their 40s to 70s. Because we think that this group of people is the beneficiary of reform and opening up. They are the owners of the main wealth now. But at the same time, this group of people, especially people in their 50s and 60s, are gradually entering retirement. So they have a very strong need for inheritance and retirement. At the same time, because they have the right to control the wealth of the family, So they are also the buyers of the family insurance. So what we think is that our customer group is clearly positioned at the age of 40 to 70, and the focus is at the age of 50 to 60, those who are about to retire. As I said before, there are 25 million people who retire every year. So our sales methods are also passed down and this pension, inheritance or pension, as a cut-off. From our current pension guarantee, we can also see that 70% of our pension guarantee customers did not buy the pension insurance, did not buy the central tax. This also led to our 2021, we got 30% of the customer's return rate. So we use For this part of the customer, for the needs of inheritance and nursing, to provide a family insurance configuration, insurance combination configuration sales method. So we changed from product drive, to sell products as a cut-in, to transform it into a sales method with inheritance and family insurance combination configuration.
spk04: For your second question regarding the product missed, we do observe a drastic change in our product missed in the past quarters and the past year. In the fourth quarter, whole life insurance and annual life insurance collectively accounted for 70% of our total first year premium as compared to 20% contributed by critical illness products. As compared to in the first quarter, the percentage of whole life and annuity as compared to CI product is much lower. And also in the second quarter and third quarter, we're already seeing that the percentage of whole life and annuity has already surpassed that of CI products. This is clearly reflected the changing demands in customers. As for whether or not the critical illness product has reached its ceiling, we will not say that, but we do believe that the growth of critical illness insurance will slow down. And in the future, savings products such as annuity, pension insurance, and home life insurance will become the main products. In response to this changing demand, we will also address our methods of selling. First of all, our target group will change to those people in the age of 40 to 70 years old, and particularly those in the age of 50 to 60 years old who are going into retirement. This group of people are the main beneficiary of China's economic development after the opening up of the firm. There's also other group of people who own the wealth of the family. So as they are going into retirement, they have strong demands for elderly care, for legacy management, et cetera. As these people are also the owner of the family wealth, they are the main buyers or they are the people who pay for family insurance policies. So this group of people will be our main target customers. As I mentioned just now, in each year there will be 250 million people going into retirement. So going forward, we're going to adjust our sales method to assess these people's needs for family asset allocation services by offering retirement and legacy management services. And as I mentioned just now, there are about the repeated purchases rate among our existing customers for whole live-in and annuity products are about 30%. which means that 70% of our existing customers have not owned whole life and annuity products before. So that indicates a significant room for further growth. Thank you. Hope that answers your question.
spk01: I show no further questions in queue.
spk04: Okay. Thank you for your attendance. If you have any follow-up questions, please feel free to contact me. Thank you.
spk01: This concludes today's conference call. Thank you for participating. You may now disconnect.
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