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spk15: Thank you for standing by for FANHUA's fourth quarter and fiscal year 2022 earnings conference call. At this time, all participants are in a listen-only mode. All lines are in place 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 the time if you would like to ask a question. For your information, the 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 San Juan's IR website at ir.sanjuanholdings.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 Jill, San Juan's Investor Relations Manager.
spk16: Good morning. Welcome to our fourth quarter in fiscal year 2022 earnings conference call. The earnings results were released earlier today and are available on our IIL website as well as on Newswire. Before we continue, please note 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 filings with the SEC, including our registration statement on Firm 20F. We do not undertake any obligation to update this forward-looking information except as required under 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. Lee Chong Liu, and Board Secretary, Li Li Li. Mr. Liu will provide a review of our financial and operating highlights in the fourth quarter and fiscal year 2022, There will be a Q&A session after the prepared remarks. Now I will turn the call over to Mr. Liu.
spk05: Good morning and good evening. Thank you for joining today's conference call. China China China China China China In the future, the development trend of individual sales will be that individual sales organizations will move towards dispersion, and non-competitive support platforms will move towards concentration. With the professional organizations that support dispersion at the highest cost, we will eventually ensure high quality and low cost acquisition. The ultimate competition of the individual sales market in the future will be the competition of platforms, the competition of digital technology, and the competition of artificial intelligence.
spk14: Over the past few years, China's insurance industry has been undergoing ongoing transformation in the life insurance distribution. While the traditional pyramid structure of life insurance sales force is deconstructing, life insurance sales teams are transforming to become more distinctly professional, specialized and elite, and are structured in a more flattened, small, dispersed and personalized manner A large number of scattered individual insurance sales organizations and independent agents are in great need of the support of a third-party public professional platform to ensure continuous professional growth and sustained competitiveness. We believe that while individual life insurance sales organizations will become more fragmented, support platforms will be more concentrated to enable cost efficiency and high-quality business growth. The competition in the life insurance sales market will ultimately come down to the competition among platforms driven by digital technology and artificial intelligence.
spk05: In the second half of 2020, FanHua launched a professionalized, professionalized digitalization and open platform strategy, which aims to transform insurance sales companies into a digital technology integrated energy-rich platform company. After more than two years of exploration and practice, in 2022, FanHua has basically completed the platform-based infrastructure, and the performance of the platform has also been initially verified.
spk14: FanHua initiated the strategy of professionalization, career-based development, digitalization, and open platform starting from the second half of 2020, dedicated to transforming from a traditional insurance distributor into a digital technology-based platform company, empowering the industry. After more than two years of transition and investment, Fanhua has largely finished the construction of our open platform, which has brought encouraging results.
spk05: One.
spk14: We have established a professional empowerment system to fulfill agents' needs for professional and career development.
spk05: We have established a professional empowerment system to fulfill agents' needs for professional and career development. We have established triple F representing family office consultant, Sanhua retirement planner, and family policy consortium training programs.
spk14: to help agents improve professional skills and help them transform from focused experts on insurance products to broader experts on family-based asset allocation, and then expanding to experts on elderly care and legacy management. In 2022, a total of more than 26,000 agents have attended these training programs. In addition, we've also rolled out 3A training programs focusing on cultivating sales supervisors' ability in recruitment, career development, and team management, thus supporting agents' continuous career progression and the sustained development of our sales force as a whole. Leveraging on our various service resources and technology and the targeted trainings, we have put in place three product lines. First, truck service plus insurance. Second, health and elderly care service plus insurance. And third, insurance policy custodian service plus insurance, which are in their essence an insurance-as-a-service model to drive agent activity and significantly improve customer experience, leading to better productivity and performance.
spk05: 三,落地3R,AR,SR,FR行销模式, 结合内外部专家库资源,通过团队协作方式, 弥补个体专业技能的不足, 帮助代理人更好的服务客户,提高成交率。
spk14: We understand that it takes time for agents to achieve professional perfection. Therefore, we implemented a triple R marketing model which assembles a team of internal and external experts to support agents throughout all the key steps of their engagement with customers as necessary to make sure that our customers will be able to enjoy consistent, high-quality professional services and drive better conversion rates.
spk05: All right. 2. We have pulled a wide range of insurance products as well as quality insurance trusts, health care, and senior care and wealth management service resources so as to enable our agents to broaden their service scope
spk14: to offer a complete set of products and services to their customers by matching customers' involving needs throughout their entire life cycle.
spk05: We have largely finished the construction of the infrastructure of our digital platform.
spk14: Since our IPO, we have invested several hundreds of million RMB in building leading insurance technologies and digital tools, including Lan Zhang Gui version 3.0, which enables full insurance transaction processing. Our digital operation platform, Fan Hua's Enterprise Rechex, our insurance policy custodian system, our double recording system, and our Fan Hua Online Academy and Fanhua's Insurance Service Butler Workstation, empowering our agents in managing their book of business. We have also rolled out a digital tenant system, which modularizes the features on our digital platform, enabling us to offer a customized, stand-alone, front-end application to each institutional user according to their respective business needs. which allows us to open our platform to the industry in a highly efficient way.
spk05: In addition to the development of FanHua's platform, FanHua has made many breakthroughs in the field of core business indicators. FanHua's platform has been proven to support the professionalization and professionalization of its agents. In 2022, despite the decline in the number of new employees, FanHua has increased the number of new employees in all sectors, and the contribution ratio of new employees has been further increased, With the implementation of the Open Platform Strategy,
spk14: we have seen significant growth across multiple operating metrics, fully demonstrating the platform's powerful support for agents in their professional and career development. With our strategy of developing top-performing agents, we've seen a decrease in total performing agents and a growth of productivity among remaining agents, and in particular, continued increase of contribution from high-performing agents. The number of 100,000 premium agents has increased year-over-year for three consecutive quarters with their contribution of our new business in 2022 increasing to 56%, up from 45% last year. At the same time, we are also encouraged by the significant progress of our affiliated Fanhua ROMS Open Platform Division, which has achieved profitability one year into operation as its business model gets more mature. As of the end of 2022, Fan Huarong's open platform has connected with over 130 institutional clients, facilitating over 250 million RMB first-year premiums during the year, representing a growth of six times from 2021.
spk05: China still has 35.7 billion yuan in total insurance, with a 11.7% growth rate, with a 10.3 billion yuan in new insurance, with a 19.6% growth rate, with a profit of 8,489 million yuan, far exceeding the company's previous expectations. Non-US accounting standards belong to shareholders with a net profit of 7091.5 million yuan, with a growth rate of more than 76.1%. In 2022, As such, despite challenges from the surge of COVID-19 cases in late 2022,
spk14: We delivered approximately 3.6 billion RMB in total gross written premiums, or GWP, in the fourth quarter of 2022, up by 11.7% year over year, of which first-year premiums, or FYP, grew by 19.6% year over year. Operating income came in at 84.9 million RMB, far ahead our guidance while non-GAAP net income attributable to our shareholders grew by 76.1% year-over-year to 70.9 million RMB. For 2022, total GWP facilitated by Fanhua grew by 10.3% year-over-year to 12.9 billion RMB, of which FYP reached 2.9 billion RMB up by 3.5% year-over-year. It's excluding the impact of the transition towards new critical income definition framework, which created a high base in January 2022. Our FYP grew by approximately 20.1% year-over-year. Operating income for 2022 reached 168 million RMB,
spk05: With this, we believe it is high time to open our platform to the industry.
spk14: Therefore, we announced our open platform strategy in the fourth quarter and initiated several acquisitions, including a leading MGA company, Zhongrong Huijin, and two regional leading companies to accelerate the expansion of our open platform.
spk05: In 2023, as the COVID-19 policy opens up, economic recovery will accelerate, The gradual recovery of consumer confidence will bring a more positive environment for the transformation and development of the insurance industry. At the same time, we also see that as customer needs and products enter a diversified era, the role of professional insurance intermediaries will be more prominent, and the professionalization, individualization, and allocation of individual insurance sales ends will also accelerate progress, and provide an excellent opportunity for the expansion of open platform development.
spk14: Looking ahead to 2023 with the reopening of China's post-pandemic steady recovery and China's economy growth and resumed consumers' confidence in spending will certainly provide a more favorable environment for deepening the transformation and drive the development of the insurance industry. In the meantime, it becomes more evident that independent insurance intermediaries are playing a more important role as customers' demand and product offerings getting increasingly more diversified, which will continue to provide the professionalization, personalization, and fragmentation of life insurance sales organizations as FanHua is built from such evolving trends.
spk05: In 2023, the year when the strategy of FanHua will begin, As we accelerate the execution of our strategic transformation in 2023,
spk14: We aim to gain more market share by focusing on the following initiatives. One, enhancing efforts on the professionalization and career-based development of our sales force. Two, increasing investments in enhancing digital operation capabilities. And three, speeding up strategic acquisitions. Our target is to achieve no less than 50% year-over-year growth in both life insurance first-year premiums and operating income in 2023. This concludes my presentation, and now the floor will be open for your questions.
spk15: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Yiju Zhang of CICC. Please proceed with your question.
spk13: Thank you for giving me the opportunity to ask this question. I also congratulate the company for achieving a steady result. I have two questions here that I would like to ask. The first question is about how to look at the insurance industry. I would like to ask the management department to discuss with us how to view the current competitive pattern of this industry. How will this competitive pattern be implemented in the future? What do you think will be the position of Fanhua in this competitive framework? The second question is that we actually announced the open platform strategy before. What is the future rhythm of acquisition and promotion? How do you expect the acquisition to pay off our current business? Based on this, how do we look forward to the level of revenue and profit in the next three years? I will simply translate it here. I have two questions. The first one is mainly about the outlook for insurance agent and brokerage industry in China. So could you share us some more color on the industry's current competitive landscape and how will it change in the future? Will this market be more concentrated or maybe we will see increased competition? And what do you think of Fanhua's position as in this whole landscape? And the second question is related to the open platform strategy. We've already seen a few acquisitions in the last few months. Could you give us some more details on the pace of your future acquisitions? And how will this strategy contribute income and earnings in the next three years? Thanks.
spk04: Hi, thank you. Let me answer this question. I am the Chairman and CEO of Huyinan.
spk16: For the questions, our Chairman and CEO of Huyinan will take the questions.
spk04: Regarding the first question, how do we look at our national insurance and economic industry, I will mainly talk about the insurance and economic industry. This is the current Well, with regard to the first question as to the competitive landscape in the insurance intermediary sector in China, I will talk about my view
spk16: on the competitive landscape and how it evolves in the life insurance industry sector in particular. My basic conclusion is that we are seeing that the competitive landscape is undergoing a fundamental change.
spk04: The change is mainly reflected in two aspects. On the one hand, the sales organization has become more elite, more individualized, and more diversified. And this change is reflected in two fronts. First, with regard to the sales organizations, we are continuing to see that they are becoming more elite-based and more personalized.
spk16: and also organized in a more flattened manner. And the major insurance brokers are also ramping up their efforts to building up the supporting platforms driven by digital technologies and AI technology.
spk04: Before that, we believe that the economic industry is mostly based on sales.
spk16: 是一家典型的销售公司。 The general perception on insurance brokers are that they are self-distributors, they are insurance distributors. 我们认为在接下来的市场的演变过程中,大的这种销售组织会解体,或者说纯粹定义自己是销售型, What we are seeing that in the future, the big sales organizations will become falling apart.
spk04: As we've seen that they're becoming more elite based and fragmented. To maintain their professional growth as well as sustain career development, they will require the support from a supporting platform.
spk16: So we believe that insurance intermediate company will transform themselves to become platforms.
spk04: The major insurance broker companies will transform into
spk16: digital technology-based supporting platform.
spk04: And this kind of sales-based economic company or this small sales organization, including this studio or independent agents, they will join this platform, the women's platform, and then get
spk16: On the other hand, the sales-focused insurance intermediate companies or the more sized sales organizations, including independent studios or independent agents, will join the supporting platforms to enable their sustained career development and professional growth. in a cost-efficient way. The state are encouraging the digitalization of oil industries and how the insurance industry is going to transform themselves digitally for the thousands of small-sized and medium-sized sales organizations including agencies and brokers. It's not realistic for all of them to invest heavily to digitalize their operation.
spk04: The competition in the future will come down to the competition
spk16: among platforms driven by digital technologies, digitally enabled and elected capabilities in AI technology.
spk04: So we see a future scene. This scene is on a digital technology platform, a platform that provides a variety of algorithmic models or artificial intelligence core capabilities.
spk16: So what we can foresee in the future is that one or two big support platforms driven by digital algorithm, AI technology, to support the operations of thousands of different sizes of entities.
spk04: The second question is about FanHua's open platform strategy.
spk16: First of all, we need to clarify that FanHua launched its open platform and personal business model 18 years ago.
spk04: Then this open platform is actually based on our consistent strategy. The premise of this strategy is professionalization and professionalization. That is, the core of the open platform is the negative energy. If you can't provide a negative energy open platform, it's simply providing a product price. It's no different from collecting orders. So the essence of the open platform But in 18 years ago, we have pushed forward the idea of our business model, which is that of a support platform plus entrepreneurial-ship development.
spk16: And this open platform strategy is basically based upon our strategy of professionalization and digitalization. So the key of this open platform or the core of this open platform is to be able to empower the participants on this platform. Otherwise, if this platform can only provide product offerings without empowerment, it is nothing but just a transaction supporting platform. So the precondition for rollout this open platform strategy is to ensure that we have the capabilities to support professional growth and to stand career development of sales agents and sales organizations.
spk04: The acquisition has a basic premise. The premise is that after the acquisition, it can bring strong performance growth to the other party and greatly reduce their operating costs, especially in terms of technology. Then, the operating costs of their middle and back stage
spk16: So the precondition for us to execute the acquisitions is that we will be able to support these acquired entities in terms of driving substantial business growth and help them to reduce their operating costs, especially the investment in IT technology costs. So we will be able to save them of the investment in mid and back office investment.
spk04: So if we can't bring the profit growth of the buyers and greatly reduce their operating costs, then we will not consider the acquisition.
spk16: So if we can't see the possibility that we are able to help them drive business growth and reduce operating costs, we will not do the acquisition.
spk04: So before this, we have completed and announced the three acquisitions. Currently, there are still ten companies that are in the process of signing. In the next two years, we hope to be able to
spk16: Currently, we have announced three acquisitions and there are 10 in the pipeline in close discussion. For the next two years, we expect to invest in or acquire majority interest in 20 to 30 regional leading insurance intermediate companies.
spk04: For 2023, our target is to acquire 10 insurance intermediary companies, contributing no less than $1 billion first-year premiums. This is the target of acquisition and acquisition, or these sales organizations that can join Fanhua's platform. Many sales organizations may not necessarily want to purchase. We will soon launch our rental system. This rental system allows the sales organization, sales company, or sales team in the industry
spk16: And as to how to empower these acquired entities or the payers who join our platforms, after all, not all of these self-entities want to be acquired and they want to remain independent. For that, we are going to launch our digital tenant systems to the industry soon. and which will enable these sales entities and independent sales team to join our platform directly.
spk04: In terms of service, we are mainly in four aspects. One aspect is to provide products and prices throughout the market. The second aspect is to provide our professional service, such as insurance and trust services, and then health services. The third aspect is to provide digital tools. For example, our dual road system, our digital operation platform, DOP's digital operation platform. And the fourth aspect is to provide SaaS services, which is the core business system. According to the Security Council's requirements, every branch must have an information system. As for how we empower this participants or the users of our platforms,
spk16: There will be four aspects. Firstly, we will offer them a full set of product and service offerings. And then secondly, we will offer them professional empowerment systems, including our main resources in terms of the trust services, health care services, and elderly care services. as well as our insurance policy custodian system. And thirdly, we'll provide them with digital tools, including our double recording system, digital operating platform. And then, fourthly, we'll also provide them with SAR service, which as or licensed insurance intermediate companies are required to be equipped with information system by the CPRRC. So these participants or these users of our platform will be able to install our core business systems and information systems directly without having to invest heavily in building up their own information system. 至于说如何展望未来三年的收入增速和利润率的这个水平,
spk04: My target for the next three years in terms of revenue growth and profitability is that I'm hoping my own target is that we can grow our life insurance per year premiums
spk16: and operating plant beds by 50% on CAGR basis. Thank you.
spk03: Thank you. Thank you.
spk15: As a reminder to ask a question, you will need to press star 11 on your telephone. Please stand by while we compile the Q&A roster.
spk12: One moment please.
spk15: At this time, I would now like to turn back to Oasis Jill for closing remarks.
spk16: Thank you for joining us on today's conference call. If you have any follow-up questions, please feel free to contact us. Thank you. Have a good day.
spk15: This concludes today's conference call. Thank you for participating. You may now disconnect.
spk10: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1. you Thank you. Music. Thank you.
spk00: Thank you.
spk15: Thank you for standing by for FANWA's fourth quarter and fiscal year 2022 earnings conference call. At this time, all participants are in a listen-only mode. All lines are in place 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 the time if you would like to ask a question. For your information, the 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 FANWHA's IR website at ir.fanwhaholdings.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. As always, this is Jill, FANWHA's Investor Relations Manager.
spk16: Good morning. Welcome to our fourth quarter in fiscal year 2022 Endings Conference Rule. The Endings Results were released earlier today and are available on our IIL website as well as on Newswire. Before we continue, please note 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 filings with the SEC, including our registration statement on Firm 20F. We do not undertake any obligation to update this forward-looking information except as required under 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. Lee Chong Liu, and Board Secretary, Li Li Li. Mr. Liu will provide a review of our financial and operating highlights in the fourth quarter and fiscal year 2022, There will be a Q&A session after the prepared remarks. Now I will turn the call over to Mr. Liu.
spk05: Good morning and good evening. Thank you for joining today's conference call. China China China China China China The trend of the future of individual sales will be the distribution of individual sales organizations, and the concentration of non-competitive support platforms. With the professional organization that supports the distribution of limited costs, it will eventually ensure high quality and low cost acquisition. The ultimate competition of the future of the individual sales market will be the competition of platforms, the competition of digital technology, and the competition of artificial intelligence.
spk14: Over the past few years, China's insurance industry has been undergoing ongoing transformation in the life insurance distribution. While the traditional pyramid structure of life insurance sales force is deconstructing, life insurance sales teams are transforming to become more distinctly professional, specialized and elite, and are structured in a more flattened, small, dispersed and personalized manner A large number of scattered individual insurance sales organizations and independent agents are in great need of the support of a third-party public professional platform to ensure continuous professional growth and sustained competitiveness. We believe that while individual life insurance sales organizations will become more fragmented, support platforms will be more concentrated to enable cost efficiency and high-quality business growth. The competition in the life insurance sales market will ultimately come down to the competition among platforms driven by digital technology and artificial intelligence.
spk05: In the second half of 2020, Fanhua launched a professionalized, professionalized digitalization and open platform strategy. It is aimed at transforming insurance sales companies into a digital technology integrated energy-rich platform company. After more than two years of exploration and practice, in 2022, FanHua has basically completed the platform-based infrastructure, and the performance of the platform has also been initially verified.
spk14: FanHua initiated the strategy of professionalization, career-based development, digitalization, and open platform starting from the second half of 2020, dedicated to transforming from a traditional insurance distributor into a digital technology-based platform company, empowering the industry. After more than two years of transition and investment, Fanhua has largely finished the construction of our open platform, which has brought encouraging results.
spk05: One.
spk14: We have established a professional empowerment system to fulfill agents' needs for professional and career development.
spk05: We have established a professional empowerment system to fulfill agents' needs for professional and career development. We have established triple F representing family office consultant, retirement planner, and family policy consortium training programs.
spk14: to help agents improve professional skills and help them transform from focused experts on insurance products to broader experts on family-based asset allocation, and then expanding to experts on elderly care and legacy management. In 2022, a total of more than 26,000 agents have attended these training programs. In addition, we've also rolled out 3A training programs focusing on cultivating sales supervisors' ability in recruitment, career development, and team management, thus supporting agents' continuous career progression and the sustained development of our sales force as a whole.
spk05: Two, build trust and insurance, support and insurance, and guarantee and insurance, three vital lines. Through scenario-based service marketing,
spk14: Leveraging on our various service resources and technology and the targeted trainings, we have put in place three product lines. First, truck service plus insurance. Second, health and elderly care service plus insurance. And third, insurance policy custodian service plus insurance, which are in their essence an insurance-as-a-service model to drive agent activity and significantly improve customer experience, leading to better productivity and performance.
spk05: 三,落地三R,AR,SR,FR行销模式, 结合内外部专家库资源,通过团队协作方式, 弥补个体专业技能的不足, 帮助代理人更好的服务客户,提高成交率。
spk14: We understand that it takes time for agents to achieve professional perfection. Therefore, we implemented a triple R marketing model which assembles a team of internal and external experts to support agents throughout all the key steps of their engagement with customers as necessary to make sure that our customers will be able to enjoy consistent high quality professional services and drive better conversion rates.
spk05: All right. 2. We have pulled a wide range of insurance products as well as quality insurance trusts, health care, and senior care and wealth management service resources so as to enable our agents to broaden their service scope
spk14: to offer a complete set of products and services to their customers by matching customers' involving needs throughout their entire life cycle.
spk05: We have largely finished the construction of the infrastructure of our digital platform.
spk14: Since our IPO, we have invested several hundreds of million RMB in building leading insurance technologies and digital tools, including Lan Zhan Gui version 3.0, which enables full insurance transaction processing. Our digital operation platform, Fan Hua's Enterprise Rechex, our insurance policy custodian system, our double recording system, and our Fan Hua Online Academy and Fanhua's Insurance Service Butler Workstation, empowering our agents in managing their book of business. We have also rolled out a digital tenant system which modularizes the features on our digital platform, enabling us to offer a customized, stand-alone, front-end application to each institutional user according to their respective business needs. which allows us to open our platform to the industry in a highly efficient way.
spk05: In addition to the location of FanHua's platform construction work, FanHua has made many breakthroughs in its core management indicators. FanHua's non-platform platform continues to be verified for the professionalization and professionalization development of its agents. In 2022, despite the decline in the total order of manpower, FanHua's all-round increase in manpower production capacity and the increase in the contribution ratio of high-end manpower, including 100,000 With the implementation of the open platform strategy,
spk14: we have seen significant growth across multiple operating metrics, fully demonstrating the platform's powerful support for agents in their professional and career development. With our strategy of developing top-performing agents, we've seen a decrease in total performing agents and a growth of productivity among remaining agents, and in particular, continued increase of contribution from high-performing agents. The number of 100,000 premium agents has increased year-over-year for three consecutive quarters with their contribution of our new business in 2022 increasing to 56%, up from 45% last year. At the same time, we are also encouraged by the significant progress of our affiliated Fanhua ROMS Open Platform Division, which has achieved profitability one year into operation as its business model gets more mature. As of the end of 2022, Fan Huarong's open platform has connected with over 130 institutional clients, facilitating over 250 million RMB first-year premiums during the year, representing a growth of six times from 2021.
spk05: In the fourth quarter of 2022, despite the impact of the epidemic, Fanhua still achieved a total insurance fee of 35.7 billion yuan, which increased by 11.7%. Of which, the new year's insurance fee is 10.3 billion yuan, which increased by 19.6%. The operating profit reached 84.89 million yuan, significantly exceeding the company's previous expectations. The non-US accounting standard belongs to the shareholder net profit of 7091.5 million yuan, with a growth of more than 76.1%. In 2022, the total insurance fee for the whole year was 127.8 billion yuan, with a growth of 10.3% in total. The total insurance fee for the new year was 29.3 billion yuan, with a growth of 3.5%. However, due to the impact of the heavy-duty insurance suspension last January, the total insurance fee for the new year was 20.1% in the second to December, with a profit of 1.7 billion yuan in the whole year.
spk14: As such, despite challenges from the surge of COVID-19 cases in late 2022, we delivered approximately 3.6 billion RMB in total gross written premiums, or GWP, in the fourth quarter of 2022, up by 11.7% year over year, of which first-year premiums, or FYP, grew by 19.6% year over year. Operating income came in at 84.9 million RMB, far ahead our guidance while non-GAAP net income attributable to our shareholders grew by 76.1% year-over-year to 70.9 million RMB. For 2022, total GWP facilitated by Fanhua grew by 10.3% year-over-year to 12.9 billion RMB, of which FYP reached 2.9 billion RMB up by 3.5% year-over-year. It's excluding the impact of the transition towards new critical income definition framework, which created a high base in January 2022. Our FYP grew by approximately 20.1% year-over-year. Operating income for 2022 reached 168 million RMB,
spk05: With this, we believe it is high time to open our platform to the industry.
spk14: Therefore, we announced our open platform strategy in the fourth quarter and initiated several acquisitions, including a leading MGA company, Zhongrong Huijin, and two regional leading companies to accelerate the expansion of our open platform.
spk05: The gradual recovery of consumer confidence will bring a more positive business environment to the transformation and development of the insurance industry. At the same time, we also see that as customer needs and products enter the diversified era, the role of professional insurance intermediaries will be more prominent, and the professionalization, individualization, and classification trend of individual insurance sales will also improve and accelerate, and provide excellent development opportunities for the expansion of open platform development.
spk14: Looking ahead to 2023, with the reopening of China post-pandemic, steady recovery in China's economy growth and resumed consumers' confidence in spending will certainly provide a more favorable environment for deepening the transformation and drive the development of the insurance industry. In the meantime, it becomes more evident that independent insurance intermediaries are playing a more important role as customers' demand and product offerings getting increasingly more diversified, which will continue to provide the professionalization, personalization, and fragmentation of life insurance sales organizations as FanHua is built from such an evolving trend.
spk05: In 2023, which will be the year when FanHua's strategy begins, As we accelerate the execution of our strategic transformation in 2023,
spk14: We aim to gain more market share by focusing on the following initiatives. One, enhancing efforts on the professionalization and career-based development of our sales force. Two, increasing investments in enhancing digital operations capabilities. And three, speeding up strategic acquisitions. Our target is to achieve no less than 50% year-over-year growth in both life insurance first-year premiums and operating income in 2023. This concludes my presentation, and now the floor will be open for your questions.
spk15: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Yiju Zhang of CICC. Please proceed with your question.
spk13: Thank you for giving me the opportunity to ask this question. Congratulations to CICC for getting a solid result. I have two questions here that I would like to ask. The first question is about how to look at the insurance industry. I would like to ask the management department to discuss with us how to look at the current competitive pattern of this industry. How will this competitive pattern be implemented in the future? What do you think will be the position of FanHua in the future? The second question is about the open platform strategy that we announced before. What is the future rhythm of acquisition? How do you expect the acquisition to pay off our current business? Based on this, how do we look forward to the level of revenue and profit of the company in the next three years? I will simply translate it here. I have two questions. The first one is mainly about the outlook for insurance agent and brokerage industry in China. Could you share us some more color on the industry's current competitive landscape and how will it change in the future? Will this market be more concentrated or maybe we will see increased competition? What do you think of Fan Hua's position as in this whole landscape? And the second question is related to the open platform strategy. We've already seen a few acquisitions in the last few months. Could you give us some more details on the pace of your future acquisitions, and how will this strategy contribute income and earnings in the next three years? Thanks.
spk04: Thank you. Let me answer this question. I'm Hu Yilan, the Chairman and CEO.
spk16: For the questions, our chairman and CEO, Ina, who will take the questions.
spk04: Regarding the first question, how to look forward to our country's insurance and economic industry, I will mainly talk about the insurance and economic industry. This is the current competition pattern and how to interpret the future pattern. I think the basic conclusion is that the current competition pattern
spk16: With regard to the first question as to the competitive landscape in the insurance intermediary sector in China, I will talk about my view on the competitive landscape and how it evolves in the life insurance intermediary sector in particular. My basic conclusion is that we are seeing that competitive landscape is undergoing a fundamental change. And this change is reflected in two fronts. First, with regard to the sales organizations, we continue seeing that they're becoming more elite-based and more personalized, fragmented, and also organized in a more threatened manner. And the major insurance brokers are also to ramp up their efforts to building up the supporting platforms driven by digital technologies and AI technology.
spk04: Before this, we believe that the economic industry is mainly based on sales and is a typical sales company.
spk16: The general perception on insurance brokers are that they are self-distributors, they are insurance distributors. 我们认为在接下来的市场的演变过程中,大的这种销售组织会解体,或者说纯粹定义自己是销售公司的,销售型的这种经纪公司,我们认为也会解体。 What we are seeing that in the future, the big sales organizations will become falling apart.
spk04: 因为销售组织我们看到正在走向精英化、分散化、个性化。 As we've seen that they're becoming more elite-based and fragmented. 他们要实现专业的成长和职业的发展是需要一个平台。 To maintain their professional growth as well as sustain career development, they will require the support from a supporting platform.
spk16: So we believe that insurance intermediate company will transform themselves to become platforms.
spk04: The major insurance broker companies will transform into
spk16: digital technology-based supporting platform. On the other hand, the sales-focused insurance intermediate companies or the more sized sales organizations, including independent studios or independent agents, will join the supporting platforms to enable their sustained career development and professional growth. in a cost-efficient way.
spk04: We see that the national strategy is to vigorously promote the digitalization of the industry, the digitalization of the insurance industry. How to do it? Thousands of small and medium-sized sales companies, whether it's an economy company or a company, not every company can
spk16: The state are encouraging the digitalization of all industries and how the insurance industry is going to transform themselves digitally for the thousands of small-sized and medium-sized sales organizations including agencies and brokers. It's not realistic for all of them to invest heavily to digitalize their operations.
spk04: The competition in the future will come down to the competition
spk16: among platforms driven by digital technologies, digitally enabled and elected capabilities in AI technology.
spk04: So we see a future scene. This scene is on a digital technology platform, a platform that provides a variety of algorithmic models or artificial intelligence core capabilities.
spk16: So what we can foresee in the future is that one or two big support platforms driven by digital algorithm, AI technology, to support the operations of thousands of different sizes of entities.
spk04: The second question is about FanHua's open platform strategy. First of all, we need to clarify that FanHua launched its open platform and personal business operation model 18 years ago. Then this open platform is actually based on our consistent strategy. The premise of this strategy is professionalization and professionalization. That is, the core of the open platform is the negative energy. If you can't provide a negative energy open platform, it's simply providing a product price. It's no different from collecting orders. So the essence of the open platform But in 18 years ago, we have pushed forward the idea of our business model, which is the BED Office Support Platform plus Entrepreneurial Development.
spk16: And this open platform strategy is basically based upon our strategy of professionalization and digitalization. So the key of this open platform or the core of this open platform is to be able to empower the participants on this platform. Otherwise, if this platform can only provide product offerings without empowerment, it is nothing but just a transaction-supporting platform. So the precondition for rollout this open platform strategy is to ensure that we have the capabilities to support professional growth and to stand career development of sales agents and sales organizations.
spk04: The acquisition has a basic premise. The premise is that after the acquisition, it can bring strong performance growth to the other party and greatly reduce their operating costs, especially in terms of technology. Then the operating costs of their mid- and post-production
spk16: So the precondition for us to execute the acquisitions is that we will be able to support these acquired entities in terms of driving substantial business growth and help them to reduce their operating costs, especially the investment in IT technology costs. So we will be able to save them all of the investments in mid and back office investments.
spk04: So if the legal acquisition cannot bring the growth of the acquisition target and greatly reduce their operating costs, then we will not consider the acquisition.
spk16: So if we can't see the possibility that we are able to help them drive business growth and reduce operating costs, we will not do the acquisition.
spk04: So before we do this, we have also announced three acquisitions. Currently, there are still a few companies that are in the process of signing. In the next two years, we hope to be able to
spk16: Currently, we have announced three acquisitions and there are 10 in the pipeline in close discussion. For the next two years, we expect to invest in or acquire majority interest in 20 to 30 regional leading insurance intermediate companies.
spk04: For 2023, our target is to acquire 10 insurance intermediary companies, contributing no less than $1 billion first-year premiums. This is the target of acquisition and acquisition, or these sales organizations that can join Fanhua's platform. Many sales organizations may not necessarily want to purchase. We will soon launch our rental system. This rental system allows the sales organization, sales company, or sales team in the industry
spk16: And as to how to empower these acquired entities or the payers who join our platforms, after all, not all of these sales entities want to be acquired and they want to remain independent. For that, we are going to launch our digital tenant systems to the industry soon. and which will enable these sales entities and independent sales team to join our platform directly.
spk04: In terms of the support, we are mainly in four aspects. One aspect is to provide products and prices throughout the market. The second aspect is to provide our professional support, such as insurance and trust services, and then health services. The third aspect is to provide digital tools. For example, our dual road system, our digital operating platform, DOP's digital operating platform. And the fourth aspect is to provide SaaS services, which is the core business system. According to the Security Council's requirements, every branch must have an information system. As for how we empower this participants or the users of our platforms,
spk16: There will be four aspects. Firstly, we will offer them a full set of product and service offerings. And then secondly, we will offer them professional empowerment systems, including our main resources in terms of the trust services, health care services, and elderly care services. as well as our insurance policy custodian system. And thirdly, we'll provide them with digital tools, including our double recording system, digital operating platform. And then fourthly, we'll also provide them with SAR service, which, or licensed insurance intermediate companies are required to be equipped with information system by the CPRRC. So these participants or these users of our platform will be able to install our core business systems and information systems directly without having to invest heavily in building up their own information system. 至于说如何展望未来三年的收入增速和利润率的这个水平,
spk04: My target for the next three years in terms of revenue growth and profitability is that I'm hoping my own target is that we can grow our life insurance per year premiums
spk16: and operating plant beds by 50% on CAGR basis.
spk03: Thank you.
spk15: As a reminder to ask a question, you will need to press star 11 on your telephone. Please stand by while we compile the Q&A roster.
spk12: One moment, please.
spk15: At this time, I would now like to turn back to Oasis Jill for closing remarks.
spk16: Thank you for joining us on today's conference call. If you have any follow-up questions, please feel free to contact us. Thank you. Have a good day.
spk15: This concludes today's conference call. Thank you for participating. You may now disconnect.
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