Huize Holding Limited

Ladies and gentlemen, thank you for standing by and welcome to Huizer's first quarter 2025 earnings conference call. At this time, all participants are in the listening mode. After the management prepared remarks, we will have a question and answer session. This conference call is being recorded and a webcast replay will be available on Huizer's IR website at ir.huizer.com under the events and webcast section. I would like to hand the conference over to your producer host today, the Caddy Low, Quasar's Investor Relations Manager. Please go ahead, Caddy.

Thank you, Operator. Hello, everyone, and welcome to our first quarter 2025 earnings conference call. Our financials and operational results were released earlier today and are currently available on both our IR website and global newswire services. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will be making forelocking statements. Please also note that we will discuss non-GAAP measures today, which are more appropriately explained in our earnings release and followings with the SEC. Joining us today are our founder and CEO, Mr. Chen Junma, COO, Mr. Li Yang, Co-CEO, Mr. Min Hanxiao, and Co-CEO, Mr. Ron Pam. Mr. Ma will start the call by providing an overview of the company's performance and operational highlights, followed up by Mr. Cham, who will go over our financial results for the first quarter of 2025. Then we will open up the call for questions. I will now turn the call over to Mr. Ma.

大家好,欢迎大家参加汇德2025年的第一季度业绩发布电话会。 Hello everyone, and thank you for joining Huizhou's first quarter 2025 earnings conference call. 2025年,面对宏观经济与国际格局的持续波动, will always stick to the customer as the center. Based on the profound understanding of the needs of users over the years, we have taken advantage of the market trend and joined hands with TUBU Insurance Company to continue to improve product certification. At the same time, we have accelerated the deep application of AR technology in various business segments, and realized a significant decline in efficiency, and established a solid foundation for long-term value creation. In the first quarter, the company achieved a total revenue of 2.8 billion yuan, In 2025, again, the backdrop of ongoing macroeconomic and geopolitical volatility was to uphold this customer-centric approach.

Leveraging years of insights into customers' needs We stayed ahead of market trends and now working alongside leading insurers, continually expanding and refining our product offerings. At the same time, we are accelerating the integration of AI across our operations, tracking remarkable productivity improvements and further optimizing our cost structure to lay the solid foundation for long-term value creation. In the first quarter, operating revenue exceeded RMB $280 million with gross written premiums and first-year premiums facilitated on our platform, increasing 38% and 31% sequentially, reaching RMB $1.4 billion and RMB $730 million respectively. Renewal premiums also grew 46% sequentially to approximately RMB $710 million.

The average age of long-term Toba users is 35 years old, and the average age of users in cities above the second county is 35 years old.

The average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and the average age of long-term Toba users is 35 years old, and

By the end of the quarter, our cumulative number of users surpassed 11 million with 390,000 new clients added during the quarter. The average age of long-term insurance customers was 35, with over 65% residing in high-tier cities, where we have consistently achieved this percentage over the past few quarters. In terms of FYP, the average tax size for long-term products rose 58% to over RMB 5,400, underscoring the effectiveness of our sustainable customer strategy. As of the end of February, 13th and 25th month persistency ratios for long-term insurance maintained industry leading levels of over 95%.

截止一季度末, 惠德与143家保险公司保持稳定合作关系, 持续创新推出差异化的定制产品。 2025年以来, The income of bank deposits and financial products is in the downward trend. Customer wealth guarantee needs to be further highlighted. Huize United Xinhua People's Bank has proposed the No. 3 quick-release plan, which is to hold the people's money bags in a way that allows them to collect the cost.

Fully play out the long-term stability of the savings insurance.

As of the end of March, we have thrown 10 ships away.

As of the end of March, we have thrown 10 ships away. As of the end of March, we have thrown 10 ships away. As of the end of March, we have thrown 10 ships away. In the market, the overall transition from a passive revenue product to a floating revenue product has further consolidated the leadership position of Huize, which is more risky in China. At the same time, in cooperation with the international strategy layout of the group, Huize jointly recruited business people and launched a small-scale global version of Shao'er heavy-duty. With the help of high-quality resources in overseas, Zhai Xing supported the global retail and overseas medical treatment and other arrangements.

As of the end of March, we have strong partnerships with 143 insurance companies and continue to develop and launch differentiated customized products with insurer partners. With declining use on traditional bank deposits and wealth management products, demand for wealth protection solutions has intensified. In response, we partnered with New China Life to launch Please Know Free, a savings product striving to achieve sustainable returns for customers. Additionally, we expanded our portfolio of customized participating products, building on the FuMengJia series co-launched with Afifacofco. We partnered with Cathay LuJiaJue Life Insurance on JinLanYiJu No.6, a participating incremental for life insurance product. This was followed by the launch of XinHaiHuiXuan, a participating annuity product co-developed with Pramerica Photon Life Insurance. These customized products were designed to cater to the industry-wide demand shift from fixed returns to potent returns. Further solidifying our leadership in China's participating insurance segment, in view of our global expansion strategy, we introduced Xiaotang Qi Global, a children's critical illness product co-developed with Cigna and CMB Life Insurance that leverages their overseas resources to offer global client settlement and overseas medical support.

With the continuous innovation of deep-seated AI and AI intelligence, the workflow model of the enterprise has changed significantly, and Huize has continued to implement the AI plus strategy to develop AI applications in various fields such as business scenarios, internal operations, and so on, to enhance service experience and internal efficiency. Based on this, we have deployed Huize AI intelligence development platform within the enterprise. to build independent AI productivity. With full use of open source artificial intelligence model policy guidance, we actively promote the privatization deployment of large models, ensure that core data is not excluded, and meet financial security and rules requirements. On the other hand, the company actively promotes AI intelligence development with low code, and supports all departments to develop AI intelligence by their own by means of feasible tools, to carry out a full-fledged productivity revolution, The rapid advancement of generative AI and AI agents is transforming traditional enterprise workflows and our AI strategy

we continue to enhance both the user experience and operational efficiency. We have deployed the Ahoiza AI agent development platform internally with the goal of developing independent AI productivity. Leveraging open source AI models, we have implemented private domain deployment of large language model to ensure data security and regulatory compliance. At the same time, we are actively promoting the development of local agents a low-cost AI agent to accelerate AI agent creation using visualization tools. This is driving a company-wide productivity revolution with AI agents acting as a new generation of digital employees. In the quarter, we have further optimized our cost structure and reduced operating expenses, with total operating expenses falling by 29% sequentially.

贵者一直贯彻以客户为中心的原则 Our goal is to create a personalized insurance service experience through innovative technology. In the first quarter, we officially launched the AR App Smart Passage, providing customers with 24-hour online insurance agent support. AR services have covered the core scenarios such as pre-sale information, insurance product recommendations, and have reached more than 15,000 Japanese services. At the same time, we have fully remodeled the user and customer service process experience, Xiaoma LiPay AI smart body is gradually realizing the automaticization of the whole process of reporting, review, and compensation. At present, we have completed the AIization of the entire product of LiPay reporting, and will continue to develop to APP and small programs. After fully online, the overall efficiency of Xiaoma Flash Pay is expected to be compressed from one day to one hour, providing customers with the most efficient LiPay experience. Xiaoma LiPay continues to provide LiPay customers Our customer-centered approach leverages innovative technologies to deliver personalized insurance service experiences.

During the quarter, we launched an AI-powered smart portal on Frasier's app offering 24-7 insurance agent support. Our AI services now cover key customer lifecycle touchpoints including policy inquiries and product managing, serving an average of over 15,000 users daily. We are also revolutionizing after-sales claims processing through Xelma Claims AI Agents, achieving end-to-end automation of claims reporting, review, and payouts. With AI now capable of handling all claims reporting, we are now working to extend this innovative feature to our apps and mini programs. This innovation is expected to reduce processing time on Xiaoma flash claim from one day to one hour upon full rollout. During the quarter, Xiaoma claim facilitated RMB 190 million in claims across 36,000 cases, providing customers with efficient and reliable insurance claim services.

惠能旗下国际品牌方力insuring page has experienced a strong growth, showing the growth potential of new markets such as Southeast Asia. According to the Vietnamese branch, Globacare maintains a good growth trend. The total balance sheet has increased by 29% in total, and the total cost and revenue have increased by 35% and 34% respectively. Recently, we have worked with the leading logistics service provider Minitapost on channel expansion. It has further expanded the team of independent financial consultants, and continued to enhance the platform expansion and transformation capabilities of GoSell. At the product end, GlobalCare is the starting point of the five-year and ten-year line of PVI insurance companies. At the same time, it enriches the product line and satisfies the customer's multidimensional security needs. Huangli InsurTech continues to play a role in the Vietnamese insurance market. Our international brand, Pony Engine Tech, continues to develop a strong growth momentum, underscoring the vast and talented potential of Southeast Asia.

Our Vietnamese operation, Global Care, maintains solid traction, and growth total policy count by 29% compared to the first quarter in 2024. The growth rate in premiums and revenue increasing by 35% and 34% year-over-year, respectively. We recently partnered with BitTotals, a leading logistics service provider in the region, to expand our distribution network, further growing our team of independent financial advisors, and enhancing the reach and conversion capabilities of the GSELP platform. On the product side, GlobalCare launched five-year and 10-year critical illness insurance products in collaboration with PBI Insurance, enriching our product portfolio to better meet customers' diverse protection needs. Home Energy Tax continues to drive the transformation of the Vietnamese insurance market through innovation and a crucial milestone of our international expansion. We are making steady progress in expanding into and other overseas markets, and I want to try to achieve a goal of reaching 30% of total revenue contribution from international markets by 2026.

全球宏观与地缘环境仍然充满了变数, 但国内及亚洲的保险任性已游层, 数字化渗透趋势加速显现, 得益于深厚的客户洞察, AR驱动的产品与服务创新, 以及越南等东南亚市场的亮眼表现, will continue to show steady growth and business resilience in the first quarter. Looking forward to the whole year, we will surround the high-quality customer group to ensure the demand, deepening the supply chain, the pink line, the health line, etc., and avoid the privatization of large models to accelerate the innovation and technological integration, and further enhance the efficiency of business. On the other hand, rely on the overseas market to land, steadily sell to overseas consumer goals, through product innovation,

Global macro and geopolitical conditions remain volatile, yet insurance demand in China and across Asia stays resilient with digital adoption accelerates, throwing on deep customized insights and AI-driven product innovation, and strong momentum in Vietnam and other Southeast Asian markets. to deliver another quarter of solid growth and operating agility. Looking ahead, we will widen our range of savings and have products for high-value clients, embedding our self-hosted large language model platform across the service chain to lift efficiency and experience. Internationally, holding should further tap into Singapore and other priority markets, keeping us on close overseas revenue targets. Branded in product innovation, customer experience, and AI enablement, Pfizer will continue to create win-win value for insurers and customers while delivering sustainable long-term returns for shareholders. This concludes my prepared remarks for today. I will now turn the call to our CFO, Mr. Ron Tam, who will provide an overview of our key financial highlights for the third quarter.

Thank you, Mr. Mai and Jamie. Good evening, everyone in Asia, and good morning for those in the U.S. Despite a challenging macroeconomic and geopolitical environment, we have delivered yet another quarter of resilience performance, in which the first quarter for both total close return premiums, GWP, and first-year premiums facilitated on our platform, increasing by 37.8% and 30.9% sequentially. reaching RMB 1.4 billion and RMB 730 million respectively. Total operating revenue remained at RMB 284 million. Our financial position remains very robust with a combined balance of cash liquidity of around RMB 202 million or US dollar equivalent 28 million as of the end of March quarter. This resilient performance was driven by our efficient omni-channel distribution network Our focused efforts to continue to acquire high-quality customers from the market and the deployment of advanced proprietary AI solutions. Crucially, we have made significant progress in executing on our international expansion strategy, which is a key goal driver for long-term sustainable growth for the company. Our strategic focus has remained on long-term insurance products, which continue to account for over 90% of total GWP associated on the platform. Leveraging on our robust omni-channel distribution network and advanced AI solutions, we are significantly strengthening customer acquisition and engagement, adding approximately 390,000 new customers during the first quarter of 2025. This brings our total customer base count to 11 million as of the end of the first quarter. In addition, repeat purchase ratio for our long-term insurance products stood at a very high level of 38%, demonstrating our ability to continue to unlock the lifetime value of a high-quality customer base through effective upselling and cross-selling. We've also seen reasonable reductions in all three kinds of operating expenses, ranging from 15% to 48% quarter-over-quarter, which has improved our expense-to-income ratio by 11.5 percentage points quarter-over-quarter to 29% in the first quarter of 2025. In addition, total operating expenses have fallen by 29% compared to the fourth quarter of 2024. The reduction reflects decisive actions in continued workplace optimization, broad deployment of AI-driven automation, which has sharply reduced manual workloads and boosted efficiency throughout the business world. These results demonstrate the strength of our intelligent cost control framework in delivering real cost savings and productivity gains in business. A clear illustration of our AI-driven productivity gains is the use of localized AI avatars in marketing. These avatars can replicate a human voice and appearance in under a minute, producing highly engaging insurance content that is virtually indistinguishable from a live presenter. Integrated with our content management platform, the system now automates script generation, video editing, and distribution, creating a seamless end-to-end workflow. As a result, we are scaling our social media presence with richer, more compelling content while materially reducing production time and costs. Our international growth engine, PolyIntratech, delivered yet another solid quarter and remains central to our long-term strategy. Building on the success of our proprietary AI toolset in China, we are now looking to deploy these solutions across our overseas operations to streamline workflows and deliver a more personalized customer journey. Vietnam continues to provide a robust proof of concept for our Health East Asia playbook, and we are making steady progress towards entering Singapore this year. These initiatives will further diversify our revenue mix and establish additional scalable growth drivers for the group. In closing, we believe that we are well-positioned to capture the opportunities emerging from China's rapidly evolving insurance landscape and the broader Asian market. Domestically, robust demand for long-term protection underpins a healthy, sustainable growth trajectory across the value chain. Internationally, Tony Intertech allows us to replicate and apply a China-proven model and proprietary AI capabilities to high-growth Southeast Asian markets, particularly among the young, rapidly expanding middle class. By combining advanced data analytics, end-to-end AI enablement, and disciplined market penetration, we aim to cement Quasar's data as Asia's premier internet platform, seamlessly connecting consumers, carriers, and distribution partners, and delivering viewable value to all stakeholders. And with that, we now open up the call to questions. Thank you very much, and over to you, operator. Thank you. We will now begin the question and answer session. To ask the questions on the phone, please press star 1 1 and wait for a name to be announced. To cancel your request, please press star 1 1 again. One moment for the first question. Our first question comes from Amy Chen from City. Please go ahead.

Hi, this is Amy from Citi. Thank you for the opportunity to ask a couple of questions. The first one would be regarding our selling expenses. We noted that the first day premium was facilitated in the first quarter, around 15% year-over-year decline. However, selling expenses was up by 7% with the gap here. And the second question is on sales momentum in the second quarter and your outlook for the rest of 2025. The industry expecting another round of pricing rate cut in the third quarter. Has this, you know, somehow boosted customer demand so far? Thank you.

Thank you, Amy.

It's a pleasure to have you again on the call. So I know that you have three questions to use just now. So the first one is regarding the year-on-year decline on FYP versus an increase in spending expenses, I believe, right? So I think to address the question on the FYP decline, I would note that in 2024, in the first quarter, there was a pricing cut. effected during the quarter, which has also led to a rush sale during that quarter. So I think effectively we are comparing the first quarter of 2025 versus a relatively high base for the first quarter of last year. So I think that has to do with a high base effect for 2024, albeit that in the first quarter of this year we have further driven our revenue growth from not just domestic but also from international markets. So that has to do with the research I just cited on the high base effect of last year. And then on the gap between the FYP downturn and the China COVID increase, I would note that the international business in terms of post-margin is relatively lower than the domestic business. And therefore, I think that So, on the second question regarding the outlook for the rest of the year, we do think that Q1 for 2025 is probably the rock bottom for this year. In Q2, we are seeing a very decent momentum. Obviously, the international market is still in high growth phase. And for domestic China market, also we're seeing a revival of growth, given that the transition to the power products has basically been complete over the last two quarters. And channels have adjusted to the new product regime. So I think that in Q2, we're seeing growth across different products. But you noted that the expectation for a further pricing rate cut in August 31st, which is now widely rumored and expected to be put in place, we do expect that there will be an effect on rush sales in the third quarter, particularly in the months of July and August. where we have seen similar situations in the last year and also in the past few years as well. Although we would note that the pricing rate at this time, because relatively speaking versus previous episodes, is relatively muted. And given that we're already in a sort of 2% handle kind of return level, the incitement for consumers to purchase would probably see a diluted effect versus what they've seen in the past years. So we do expect that CO3 will be strong, with August being the peak for domestic sales of, you know, healing products.

Hope that answers your question, Amy.

Yeah, thank you, Ron.

Thank you for the questions.

One moment for the next question. It comes from the line of Kenny Lim of UOBKM. Please go ahead.

Good evening, Ron. I'm Kenny from UOB. And I have two questions for my end. First one, how do we expect the enforcement of power delivery across the FEC channels to affect your 2A business? And how does it change the overall industry competitive landscape? And my second question is about the latest international derivative contribution in first quarter. And also, what is the later progress of your business accession plan in Singapore and Philippines? Thank you.

Thank you, Kenny. Thank you for your support. Two questions. One on Dao Shin Ke Yee, which is the regulatory rule change impacting commissions for for various channels. Given that we have lived through this change in the last 12 months now, and we do hear and expect that the similar measures will be implemented and imposed upon the entire agency channel, which you have noted in your question. If such a measure would be implemented in the second half of this year, we do expect that the so-called impact on our business would be positive because what that means is that the playing field is levelled among the different channels, among bankers, brokers and agencies. And therefore, we do expect that there will be a continued so-called exodus of agents from the Thai agency model into independent third-party type of service ourselves. So we would likely be capturing an additional influx of productive agents if such a measure will be implemented on the agency channel. And on the overall market, I would think that similar possibilities will be seen across our competitors as well. And as a whole, I think the market would continue to gravitate towards a more independent third-party kind of broker agency distribution model. We do know that right now in China, the third-party intermediaries still account for less than 10%. I think still mature and developed markets such as Japan or Hong Kong or even Singapore, where we see that intermediary broker agency distribution is as much as 30% to 50% of the market. So in the long-term secular trend, we do see that the intermediation of premium distribution will continue to be in favor of platforms such as ourselves. And the second point that I would note here is that we do see that independent financial advisors or independent agents are increasingly favoring platforms where they can get access to a wide variety of products from different providers such as ourselves. agents to serve the customers and also especially the digital age whereby agents will require digital tools to serve the customers and to make sure that their customers have a very efficient and digital purchase journey. And for the likes of the incumbents, this may be a difficult solution to be provided and where we have a very clear and strong advantage on the competition. So overall, we do think that the impact will be positive and we would wait and see when the measures will be implemented on the agency channel. And the second question on international market expansion, we are very much on track in terms of our expansion into Singapore. We would likely be able to give a further material update in our next earnings call as to what our Singapore development has materialized into, hopefully into operational status by the third quarter. We're working very closely with regulators in the meantime to finalize arrangements and to make sure that our recruitment of necessary personnel for the business is in place. And the target is to be in business on this model by the third quarter of this year. Philippines, we are still progressing. Given that we are now prioritizing Singapore as a business development market, we likely will see Philippines in the second half this year.

Thank you, Kenny.

Thank you for the question. With that, I would like to hand the call back to Kenny for closing remarks.

Thank you, operator. In closing, on behalf of Policies Management Team, we would like to thank you for your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the call.

That concludes today's conference call. Thank you for your participation.