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spk01: Thank you for standing by for FANOR's first quarter 2022 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'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 Fanois' IR website at IRFanoisholding.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 Cho, Fanois' Investor Relations Manager.
spk06: Good morning. Welcome to our first quarter 2022 and its conference call. The end 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 this statement 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 filing with the FCC, including our registration statement on Serm 20F. We do not undertake any obligation to update this full looking information except as required under the applicable law. Joining us today are our Chairman and Chief Executive Officer, Mr. Yi Nan Hu, Chief Financial Officer, Mr. Peng Ge, Chief Operating Officer, Mr. Li Chong Liu, and Chief Digital Officer, Mr. Jin Li. Mr. Liu will provide a review of our financial and operational highlights in the first quarter of 2022. There will be a Q&A session after the prepared remarks.
spk04: Now, I will turn the call over to Mr. Liu.
spk05: Good morning and good evening. Thank you for joining us today on Conference Call.
spk04: Since the beginning of 2022, the spread of Omicron virus has caused the COVID-19 epidemic to spread in Shanghai, Guangdong, Shandong, Jilin, Hebei, Zhejiang, and other places. Since the beginning of 2022, the Omicron COVID-19 variant has been fueling outbreaks in provinces including Shanghai,
spk05: Guangdong, Shandong, Jilin, Hebei, and Zhejiang, dealing a severe blow to offline activities and training of our team. In the first quarter of 2022, one-third of the training programs and customer activities were canceled. And in most COVID-stricken areas, such as Shenzhen and Shanghai, Fanhua's claims adjusting business almost ground to a halt, recording a loss in the first quarter. 疫情的反复和经济前景的不确定性
spk04: Also, to a certain extent, it facilitated the release of insurance consumption needs of residents. Added to the high technical impact of the new and old heavy-duty definition switch in the same period last year. In the first quarter of 2022, the insurance industry's insurance fee size dropped by 3.1% in the same ratio. Under this background, Fanhua's insurance bill has dropped, but the total insurance fee size still achieves a 10.1% increase in the same ratio, higher than the industry increase. The COVID resurgences and economic uncertainties to some extent restrained the release of customer demand for insurance.
spk05: Along with the high base effect resulted from the transition to the new critical illness definition framework in the first quarter of 2021, the gross written premiums, or GWP, of the life insurance industry in China fell by 3.1% year-over-year. Against this factor, Fanhe's first-year premiums of life insurance dropped in the first quarter of 2022. However, the GWP of our life insurance business still managed to grow by 10.1% year-over-year, defying the industry's downward trend. Fanhua's 13-month persistent ratio still remained the vault 91%, while most insurers saw deterioration in their persistency ratios, manifesting the high quality of our business and the stability of our main sales force. And operating income reached 20.6 million RMB, meeting our expectations.
spk04: No matter how many challenges we face,
spk05: 在专业化,职业化,数字化,开放平台的战略指引下,公司稳步推进多项工作。 Despite mounting external challenges, we have continued to execute on our professionalism, professionalization, career-based digitalization and open platform strategy and made steady progress in the following key initiatives. 一,降本增效。
spk04: One, achieving cost reductions and efficiency improvements.
spk05: We've been able to strictly control costs by optimizing staffing, closing low-performing institutions, and downsizing inefficient outlets, as well as improving average efficiency of our employees by optimizing the workflow in our daily operations. In the first quarter of 2022, if excluding the increase in investments in our digitalization and yintong initiatives, our general and administrative expenses decreased by 17.2% year-over-year,
spk04: Second, deep-rooted promotion of insurance trust and family trust services to attract high-quality clients. Fanhua faces 100,000 P and other GEU agents to hold up to 10 professional training sessions with additional consultants. More than 1,500 additional consultants have completed the certification training. More than 20 high-quality client salons have been held. Through the establishment of insurance trust, Two, further enhancing our capabilities to offer referral of insurance trust and family trust services to mid to high net worth clients.
spk05: In the first quarter, we have hosted about 10 family office consultants or FOC training sessions which focus on educating our sales agents on all-around knowledge related to insurance trusts and family trusts and completed relevant certification programs for over 1,500 elite sales agents. Thank you. as defined by those who have facilitated over 100,000 first year premiums annually. We have also organized over 20 customer engagement activities targeting at high net worth customers as a result of which facilitated such customers to set up insurance trust accounts covering 50 large ticket insurance policies, contributing more than 32 million RMB of first-year premiums in aggregate or 600,000 RMB of first-year premiums per policy.
spk04: 提升队伍专业销售能力 第一季度,除了加班顾问FOC的认证培训, Fanghua has also completed the family pension planning and family pension planning course system. This includes the construction and awarding of life-saving animals and pension money. Next, we will continue to provide certification training related to landing in the country in the second quarter. In the second half of the year, we will also increase the training certification of insurance management, that is, insurance decommissioning plus heavy-duty insurance, to continue to help the team systematically improve professional knowledge and ability.
spk05: Three, improving the professional skills of our sales teams. In the first quarter, apart from offering FOC training and certification programs, we have also finished establishing the course framework for family retirement planners, or FRP, annuity products and authorizing FRP lecturers. Relevant training and certification programs are expected to roll out across the country in the second quarter. For the second half of 2022, we also plan to start training and certification programs for policy managers focusing on helping agents to develop the ability to offer policy custody services and enhance knowledge on protection type products including curable illness products, so as to enable agents to transform from experts on insurance products to experts on family-based asset allocation, and then to experts on elderly care and legacy management.
spk04: Fourth, we will continue to promote the China Color Project, which is an excellent entrepreneur in the industry. There are more than 500 excellent entrepreneurs in the industry in 2021, leading the team to join Fanhua. The first quarter continues to make a profit, contributing nearly 45 million new unit fees, becoming an important force in the development of the industry. In terms of the professionalization organization of Yuntong, the progress of Yuntong mentor and financial advisor Zhao Mu is smooth. Based on the strict performance assessment, the mentor and financial advisor number exceeds 410 people.
spk05: Four, recruiting high-performing elites. For existing sales force, we have been carrying out the Huacai plan for recruiting industry elite entrepreneurs together with their own sales teams. Over 500 elites as well as their teams have become part of Fanhua since 2021 and contributed Approximately 45 million RMB of first-year premiums in the first quarter of 2022, representing a strong power for Fanghua's business growth. For the Yuntong business unit, the recruitment of Yuntong advisors and financial planners has gone smoothly, despite high standards and performance requirements we applied. As of the end of the first quarter, we had over 410 Yuntong advisors and financial planners, contributing approximately 15 million RMB of first-year premiums with productivity of about 40,000 RMB. Five, finalizing the preparation for the launch of Lan Zhang Gui app version 3.0 on May 20, 2022. We have worked to upgrade Lan Zhang Gui from an insurance transaction-focused platform to a one-stop digital operation platform, making trading and services smarter, smoother, and more convenient.
spk04: Six, we have worked to build a standard workflow for the 3R marketing mode of the team.
spk05: 6. Working on establishing standard operating procedures featuring a 3R, i.e., account responsibility, solution responsibility, and fulfill responsibility marketing model of platform-supported teamwork to enable our agents to provide more professional and all-around services to their clients. 7.
spk04: 7. Accelerating Market Development of Open Platform Strategy In the first quarter of 2022, first-year premiums facilitated on Fanhua's RONS open platform strategy
spk05: reached about 40 million RMB, up by 62.3% quarter-over-quarter, and have shown an ever-stronger momentum month-by-month.
spk04: In the second quarter of 2022, the challenge is still huge. On the one hand, the impact of the COVID-19 pandemic on the offline industry of the team is still ongoing. On the other hand, the dual road will continue to be implemented in Hebei and other regions of the country since June. We still face tremendous challenges in the second quarter of 2022. COVID-19 continues to adversely affect the offline activities of our sales agents. Meanwhile, the regulatory requirement for double recording is set to be implemented in Hebei Province and other areas
spk05: starting from June, expected to temporarily impact the whole industry across the board, including FANHUA. Despite these headwinds, the management team is still confident in making operating profit in the second quarter of 2022.
spk03: Hello, everyone. This is Yi Nan Hu, and now I would like to announce the dividend plan for 2022. 二零二二年五月二十六号,泛华宣布将按照20比4.71的比例, 將其持有的泛華金融控股有限公司的股票派發給泛華股東。泛華 announced on May 26, 2022 that it will distribute 4.71 CN Finance ordinary shares to the holder of each 20泛華 ordinary shares. This is also equivalent to 0.2355 CN Finance ADS
spk05: for every 180 years of the company held.
spk03: 股权登记日为2022年的6月9号, 分红将在2022年的6月28号前后派发。 The dividend is payable on or around June 28, 2022 to shareholders of record on June 9, 2022. As of May 26, 2022, the value of the share price of this stock is $3,137 million, equivalent to $0.58 per ADS, which is close to the cash share price of 2021.
spk05: Based on the market value of CN Finance as of May 26, 2022, the value of the stock dividend amounts to approximately $31.4 million, equivalent to $0.58 per Fanhua IDS, close to the total amount of the cash dividends that we paid in 2021. 下面我来回答大家的问题,谢谢大家。 This concludes our presentation, and now the floor will open for your questions.
spk06: Hello, Dave.
spk01: Thank you.
spk05: Are you ready for questions?
spk01: Thank you. As a reminder, to ask a question, you would need to press star 1 on your telephone. To withdraw your question, please press the pound or hash key. Please stand by while we compile the Q&A roster. I show our first question comes from the line of Zixian Wang from CICC. Please go ahead.
spk02: Hello, manager. Thank you for giving me this opportunity to ask a question. First of all, congratulations on our EQ performance. I actually have two questions to ask. The first question is about the savings insurance. How is the savings insurance sold in the first quarter now? How is it from absolute value or from the same situation? What are the numbers? Then, after looking at the second quarter, how does our company see the demand for this market savings insurance? Also, what is the ratio of the allowance we receive from our agents and insurance companies? This can help us to make a prediction of this year's allowance income. Secondly, does the company have any guidance on the year-round goals? For example, financial aid, revenue, operating profit, etc. This can also help us to make a plan for the year. Next, I will simply repeat these two questions in English. And the first question is about the saving product. So could you share us with the Q1 numbers and the future outlook of saving products, as well as the commission rate that we give to the agent and collect from the interest company? So it may help us to estimate the brokerage income. And the next question is, do we have full-year guidance in terms of IP revenue or operating revenue? That's all my questions then.
spk03: Okay, thank you. There are a lot of questions. I think there are three questions. The first question is about the sales situation in the first quarter. Compared to the same period of last year, the sales of the new unit in the sales section in the first quarter were flat. This is the first question. However, the ratio has been greatly improved in terms of product structure. The change in the structure of the product is mainly due to the large growth in the ratio of the first quarter of last year, which is the open-door red heavy-duty line.
spk06: I think your question can be divided into three small questions. For the first part, which is the sales of our savings products in the first quarter of this year, compared to the same period last year, the first-year premium of our savings products is sluggish year over year. However, the percentage of the total amount of first-year premium is actually higher than than the previous quarter and the previous year, mainly due to the high base in the first quarter of last year due to the hot sales of critical units products prior to the transition to the new critical units definition framework.
spk03: As for the changes in market demand, we are observing a trend in customers' demand
spk06: Transisting from the critical illness to products that can cater to their needs for LGB care and legacy management. So we believe that the growth momentum of savings products will continue in the coming four quarters.
spk03: This business has a large amount of money and a short deadline. So from the point of view of the total allowance, it is obviously lower than the average allowance. From the point of view of the total allowance, it is lower than the average allowance.
spk06: As for the commission rate for the savings products, for insurance intermediaries, our commission income consists of those first year commission and renewal commission. And there are two basic characteristics of savings products, which is the policy amount is large, while the renewal terms are relatively short. So the total amount of commissions is actually lower, is actually declined.
spk03: Since last year, we have observed that the conversion rate between First Opinion and APE
spk06: is actually declining. And the conversion rate has dropped to roughly 30%. And so we are trying to make an effort to improve the conversion rate by means of improving our product structure as well as the weight of selling to extend the renewal periods or renewal terms of the product that we sell to improve the conversion ratio.
spk03: We can't predict the impact of the pandemic on the outside. We can't predict the impact of the pandemic on the outside. We can't predict the impact on the outside. As for the four-year guidance,
spk06: We are actually faced a lot of external macro environment uncertainties, which makes it difficult to give an accurate position of the business outlook going forward. Particularly, due to the COVID-19, we don't know the magnitude of the impact on our business yet. Right now, so far, we haven't seen any signs of this in terms of the COVID-19 impact, particularly in the second and the third tier cities where the COVID-19 control measures, the restriction measures is relatively stricter than the first tier cities. We hope that by the second quarter, we can have a better idea of our future outlook.
spk03: From the point of view of our internal operations, we also see that the company's process of operating has significantly improved compared to the previous one, especially our high-tech salespeople, including our machines. These measures to promote our
spk06: However, internally, on our operational-wise, we are actually seeing sequential improvement in our operating matches, particularly the continuing improvement in the productivity of high-performing agents.
spk03: Thank you.
spk06: Hi, Zhixian, do you have another question?
spk02: Sure, go ahead. Okay, okay. I have another question. I want to ask about the new rules for the human rights sale. Last month, it was also issued a petition and last year's petition actually had some differences, but the core still mentioned that the insurance company went to the channel of a complex demand rate of a top line problem. At the same time, it also mentioned a problem of agent division and examination. We have a prospect that the new rules will land in the future and will affect our sales team and What is the impact of the commission? I will simply translate this question. This new rule is very obvious.
spk03: It is to prevent some problems in the industry, to ensure the long-term health and stable development of the entire industry. As Fanhua, we are very welcome to this new rule, to be able to land as soon as possible. Because this is a company of Fanhua as a long-term company, We really hope that the industry can develop in a long-term healthy way. At the same time, for the protection of the rights of investors, for the protection of the interests of insurance companies, from all aspects, we believe that a reasonable, healthy industrial chain of operation is the only way The job measures, I think the purpose is to curb the irregularities in the industry and to promote a healthy development in the longer term of the insurance industry.
spk06: So we totally welcome the implementation of these measures. And it's also in line with our business philosophy since we are here for the long term. And we believe that the new measures will be helpful to protect the interests of both the consumers and insurance companies and all the other participants in the value chain. So a reasonable or healthy interest spread between different part of the viral trend is helpful for a sustainable development of the industry. 我们坚决反对通过佣金来进行这个市场竞争,而应该是通过产能,通过这个给客户提供这个这个这个配置更好的这个
spk03: product or service to compete. Therefore, we believe that in the future, a well-off salesperson has to rely on his or her output to increase his or her wage income, rather than increase his or her income by the level of his or her wage income. So, based on all the actions we have taken and the situation we are in, We totally object the idea to compete for market share by increase the commission rate. Instead, we believe that we should provide
spk06: better services to customers and offer better products so as to compete to get market share. And we also observed that from our own statistics that our high performing agents actually have increased their commission income, not because of the increase in commission ratio, but instead because of the productivity increase. And all our initiatives, the results also show in this continued trend.
spk02: Thank you.
spk06: Thank you.
spk02: Thank you.
spk06: Hi, Dave.
spk01: Thank you. I show no further questions in the queue at this time. I'd like to turn the call back over to you, Ms. Cho, for closing remarks.
spk06: Thank you for participating in today's conference call. If you have any further questions, please feel free to contact us. Thank you.
spk01: This concludes today's conference call. Thank you for attending. You may now disconnect.
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