Q4 2021 Huize Holding Ltd Earnings Call
Today's conference is scheduled to begin shortly please continue to standby. We thank you for your patience. Today's conference is scheduled to begin shortly please continue to standby. We thank you for your patience.
[music].
Ladies and gentlemen, thank you for standing by and welcome to wait they're holding Ltd fourth quarter and full year 2021 earnings conference call. At this time all participants are in a listen only mode. After the management's prepared remarks, we will have a question and answer session.
Today's conference call is being recorded and a webcast replay will be available. Please visit wait there's IR website at IR docs wait their dot com under the events and Webcasts.
Like to hand, the conference I bet, you speak of host today Ms. Harriet her wages Investor Relations Director. Please go ahead herriot.
Thank you operator.
Hello, everyone and welcome to our earnings conference call for the fourth quarter and full year 2021 .
Our financial and operating results were released earlier today and are currently available on both of our IR website and the newswires.
Before we continue I would like to refer you to the Safe Harbor statement in our earnings press release, which applies to this call I said, we will be making forward looking statements.
Please also note that we will discuss non-GAAP measures today, which are more thoroughly than in our earnings release and filings with the SEC joining.
Joining us today are founder and CEO Mr thinking.
Well, Mr. Lee <unk> co CFO , Mr Ming Huntsville, and co CFO , Mr. Yano again.
Well starting to claw back providing an overview of the company's performance and operational highlights for the fourth quarter and full year of 2021 .
Tim will then provide details on our financial results for the period before we open up the call for questions.
I will now turn the call over to Mr. Mark.
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Hello, everyone and thank you for joining with us fourth quarter and full year 2021 earnings conference call.
China insurance industry witnessed a number.
In 2021, however, this brought about new opportunities and a year of reform wager.
Beside the ongoing pandemic further regulatory refinement and increasing uncertainty in the overall market and business environment.
[laughter] adheres to a user centric strategy and digitalization philosophy and online to offline integration, which led to another year of satisfactory result.
In 2021 total gross written premium or two WP facilitated on our platform increased by 66, 2% year over year to RMB 5 billion, while operating revenue increased by 84% year over year your R&D, you're putting two 5 billion.
Making the revenue guidance, we provided for full year 2021 .
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In the fourth quarter totaled you could repeat it facilitated on our platform increased by 93, 2% year over year to RMB 199 billion.
And no operating revenue grew one five times year over year to RMB 980 million.
He would repeat for long term insurance products accounted for 97% of Toyota DWP and continue to generate high quality business or insurer partner.
While growing rapidly we were able to continue maintaining a high quality user profile in.
In the fourth quarter roughly 60.
Roughly 67, 1% of our long term insurance customers were from higher tier cities.
And that's H eight of 35 three years.
Insurance off firsthand Premier the average ticket size of long term insurance progress inquiry from RMB 6684 in the third quarter to RMB 9593 in the fourth quarter.
I spoke November our persistency ratios for long term life and health insurance in the 13 and 25th month has just been I think industry high level, 94%.
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Now turning to our product.
The announcement of the new regulation on Internet personal insurance, we proactively extended or savings product line could cope with the surgeon market market in mind in.
In the fourth quarter, our savings insurance product contributed to about RMB, one 2 billion after the first year premium.
In response to the change in our supply online savings insurance products. After the new regulation, we focused on co developing such product with leading mid to large sized inkjet partners.
Launch the first internet only incremental whole life product in January .
And at same time, we have accelerated the offline sanction to facilitate the provision of online and offline products and services.
Stimulates demand for protection products, we launched Darwin numbers in January which was the first major critical illness insurance product, we launched the new regulations came into effect.
In addition to the cost effective feature of the Darwin theory critical illness product.
Remember six has upgraded the protection benefits, especially as the inclusion of comp ratio reinstatement entity. After the first Glenn critically on it.
We believe that the adjustment of our product strategy and.
Introduction of new products.
Not only demonstrating our quick response to the new operating environment, but also indoor or experience.
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At the end of the fourth quarter, we have cooperated with 190 <unk> partners and has strengthened our offline presence.
December we entered into a definitive agreement to acquire 100% equity interest in Shanghai, and how insurance Agency Company limited.
The application is expected to be completed in March this year.
Insurance is a nationwide process in our insurance agency company with business networks in Alberta provincial areas in China.
We believe the acquisition will reinforce our competitive edge in both online and offline service capabilities.
General strategic synergies within our new Digitalized ecosystem.
We believe this will accelerate.
The <unk> integration, thereby strengthening our service capabilities for users through a full range of insurance products across all scenarios. Please.
Please go out allow us to meet the needs of users to online insurance products, while simultaneously, providing education and professional services.
Our local branches.
Moreover, through our platform, we have empowered the transition our intermediary with digitalization and product supply.
Thereby creating scalability and where do you think the operating cost of Lora ecosystem.
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During this years operating in the long term insurance market, our high quality and differentiated services remains one of our core competency in.
In 2021, the total number of insured claim cases affected by Orange Cellmark when service.
43000, and the total claim settlement rates.
RMB $517 million.
The highest claim settlement amount in a single case reached RMB 2 million so.
Upgraded online plan enabled seven.
70% of users to meet their insurance plans using total coffee.
Further highlighting the efficiency.
<unk> of our online insurance services.
The year over Triple customer service workforce.
Unanimously recognized by the industry and we were awarded the 2021, China Insurance Arent Award.
Moreover, we have published our first ESG report highlighting our strategic initiatives.
Initiatives.
Accomplishments, while providing users an investor with a new perspective on Guizhou.
Our continued efforts on optimizing service capability and improve the user experience has enabled us to attract more new users and increase their conversion rates.
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In 2021, we also began to explore the digital and technology capability that we have developed in house, such as the digital CRM system and the MLP encouraging quality control system to insurance company, thereby diversifying our revenues.
At the same time, we are establishing a new business line Hardtke independent insurance agents.
The opportunity growth for further reform in traditional channels.
The separation of product and.
Development and distribution industry and empowered offline agents with a product matrix online customer acquisition capability and online business development tools and services.
Platform.
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In 2022, as we continue to see a refinement and industry regulation and the business environment, We will actively strengthen <unk> leading position in the online insurance business.
We will rely on more solid utilization in data analytic capabilities to continue Kenny in depth insights on users.
Launch new products that meet the protection needs of users, thereby delivering the competitive advantages of an online insurance platform.
These patients effectively and inclusive distribution channel.
In time, we will continue to expand our off line layouts and further strengthen the wholesale integration of products and services to it.
A more professional and seamless user experience with drive to promote the growth in a number of users and improve user quality, thereby driving sustainable growth in both our premium and revenue.
This is all at tier one the CFO Ross.
<unk> CFO .
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This concludes my prepared remarks for today I will now turn the call over to our CFO , Mr. Rohner, Ken and he will provide an overview of our key financial highlights for the fourth quarter and full year 2021.
Thank you.
Good evening everyone.
First of all I would like to thank everyone. On this call for your continued interest in following the company.
In particular in light of the recent turbulent market conditions and for our friends in the Asian time zone. Thanks, so much for spending defining Microsoft's here.
And to those of you who may currently be under quarantine.
Lockdown semi lockdown mode in Hong Kong or mainland China.
C L P.
For the purpose of this call I would just like to quickly recap a few key highlights and takeaways from this quarter's operating and financial results.
And for the detailed financial line items I would like to refer you to.
Look at all uploaded earnings release more detail.
Overall, we're very pleased to close out the final quarter of 2021.
Record highs in both total gross written premiums GWB facilitated on our platform.
Total operating revenues.
For full year 2021, kudos uwp amounted to RMB 5 billion, representing strong growth of 56% year over year.
Firstly, a premium black white be accounted for RMB, three 1 billion or 62% of the total DWP, which is.
It's up 99% year over year from 2020.
Renewal premiums accounted for RMB, one 9 billion.
Could you kind of put eight without portals DWP.
Sending a year on year increase of 35% in 2021.
As we have expected during our Q3 and thoughtful.
<unk> focus on savings insurance products since the beginning of the year coupled.
Coupled with strong market demand for savings insurance product that consumers with <unk>.
<unk> provides strong momentum for growth in savings products and <unk> in the fourth quarter.
Our continued strong growth in savings product.
We have demonstrated in the results.
So being a reflection of a few very important aspect of our platform business and local customer base.
First and most importantly, the quality of by existing customer base and you've got good customer acquisition.
File Omnichannel distribution platform that we have.
A couple of years.
Two key metrics to highlight again, which demonstrates is the average ticket size, but the long term insurance products that we distribute it.
As well as the persistency ratios that we have to look at what do we do look at all of these.
So average ticket size this quarter, we have put as seen December .
Increasing folks 6684.
For the third quarter to RMB 9500.
Fourth quarter.
November opposite persistency ratios for long term Gladden health.
Policy renewals in the 13th month that still remain.
Very high level of nine 4% compared to industry averages.
The consistently high because this is the metric that we are deliberate also helped deepen engagement and relationship with our upstream insurance carrier partners and that continues to reflect the high quality of our $7 5 million customer base that we've accumulated to date.
And the long term lifetime value potential that can extract.
For the year 2022, one of our key strategic initiatives could be to focus on further deepening our engagements by existing high value customers by encouraging cross selling and up selling opportunities.
Leveraging on our proprietary data insights that we have accumulated from the interactions. These customers have with our platform over the lifecycle.
Utilizing our expanded offline service coverage from our continued investment in this area.
Our strong operating performance in the fourth quarter has driven a one 5% increase in operating revenue to RMB $976 million for the quarter.
What's the cause of the full year 2021 at RMB, two 5 billion, which represents an increase of 84% yoga, yet and surpassing our full year guidance given in our last earnings call by 10%.
For the quarter. We also achieved a net profit of RMB $19 8 billion.
As we head into the year 2022, amid a backdrop of titling industry regulations.
Challenging macroeconomic and capital market conditions.
The next two quarters I expect it to be a period of application and transition for most players in the industry.
As always our first priority from a strategic financial management standpoint, it's a further improvement in overall corporate cost structure and operating efficiencies.
As we have reported the last quarter. We are currently in the midst of implementing group wide organizational structure optimization.
And so far we have achieved a double digit percentage improvement.
Cost base in the new year.
In addition, the board has also approved a share repurchase program, which we have announced also today.
Which is aligned with our commitment to return value to our shareholders.
It reflects the continued confidence that we have to purchase long term growth prospects.
We believe that the current market conditions to provide us opportunity to strategically allocate capital to enhance shareholder value.
While maintaining resources to fund our operations and continued business growth.
This concludes our prepared remarks for today, we'll now open up the call to Q&A.
Thank you operator.
Thank you ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to withdraw your request. Please press the pound or hash key please standby, while we compile the question and answer roster.
So once again, ladies and gentlemen, this star one for questions.
Our first question comes from the line of Michelle MA from Citi. Please ask your question.
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My first question is about the product mix.
For the first year premium.
And in the fourth quarter last year, we noticed the take rate for our premium actually are increased.
Our ste.
Our operating revenue.
This outpaced our G. W. P.
Pete on the region.
Q4 last year, so what's the reason behind and the second question is about the Rani.
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Regulatory environment changes.
Our new product strategy.
What's the difference.
Between you know.
The older model of cooperating with.
Medium sized insurance company versus currently we need to.
Collaborate with more.
Our top tier insurance companies what's.
What is the major difference and the difficulties we face here.
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Sure. It's Ron here. Thank you so much for joining us and for the two questions maybe quick answers to questions Amit.
First question really relating to the take rates.
The fourth quarter.
How the product mix is looking at.
In the fourth quarter.
So I think the overall take rate or you've seen the increase is really a function of the fact that the.
The mix opportunity to BP in the fourth quarter.
A much larger contribution program.
About 71, 3% of the fourth quarter GDP is coming from Bob Firstly, a premium policies and $28 seven renewals and in terms of the FY <unk> product mix. So I can give you some more detailed breakdown here roughly.
Roughly 63% is coming from long term life.
And long term lies mainly.
The incremental save.
Savings.
Greeting.
Our life.
And then around 21, 6% is coming from annuities.
And then 10% coming from long term health products, which is critical illness and then the rest of it is weak on the short term products. So I think overall and particularly has improved mainly as a result of the increased.
Caution of contribution from <unk>.
Overall, we can premiums number.
The answer to the first question.
For the second question with respect to the new operating environment.
So I think on the product strategy perspective, I think would be quite clear to tell the market that we would be seeing a significant.
I guess changes on the <unk>.
Online site as it relates to the online savings product segments, which have which has obviously been a key driver for growth for 2021 year and also as we expect in the new year. I think this is a combination of a few factors at play and most importantly, I think it's really a result of function of the market demand for insurance products.
The savings or investment linked products.
Continued weakness in the protection products as we are.
Across the board.
Industry.
And so the new year. This year I think we will still be placing significant focus on driving the savings product segment online and offline. So your online strength as you see we have a quote.
The audience at the opening remarks, we have already put online because.
Internet online savings products.
Quantify insurance company partners.
And that wasn't January and actually we have also introduced an online.
And those products are in our mistakes as we approach.
And that will be delayed.
Turning the buckets fall.
We have a full suite of products in our pipeline 30 products, which we'll be looking to release in the sphere and the sort.
I think we on a very good track here.
As to the offline space again.
I think a lot of bid type of smaller type of insurance companies that we are working with.
Which may not qualify under the new rules on the online side, we will be able to offer all products and I think thats why we are now celebrating online offline.
<unk> business model.
We also have this.
Just now.
In December that we acquire 100% interest investment how insurance, which provides us with the offline coverage electric professional areas.
This will be speed up online on touch points.
And the ability to service customers in the offline context. So I think that is really the major changes that we're seeing.
Back to the.
So congratulations.
And of course in the new year, and I think that we will continue to.
Drive the momentum in this space and that hopefully will have more material update it makes our earnings call for for us to share with everyone. Thank you.
Okay.
Yes.
Right. Thank you. Our next question comes from the line of Mindy go from CLSA. Please ask your question.
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Somehow insurance that you agreed to acquire somehow insurance in last December and what will be your business plan for this company and what is your plan for online offline integration planning to feature and the second question is regarding the technology export.
And you have mentioned previously that you had begun to export your technology to other insurance companies and it will.
<unk> generated revenue streams, and just I wonder could you. Please give us an update on this business and its related revenue and as well as an outlook in the future.
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Acquisition.
And to our business plan with respect to that I can also touch upon that quickly just knowing the sponsor will be shot question I think the key focus areas here is that one thing we've always been trying to comp.
Complement of surplus capabilities into offline context.
That's not to put them at the beginning of last year I think over the prescription use of the company's departments, we have really been solely focused on the online distribution.
Online service capabilities to our customer set and I think starting from last year.
The addition of a few things one thing directly to changing regulatory changes and two I think with respect to our own.
Internal business plan to to improve and deepen the engagement of our existing customers to drive repeat purchases to drive retention and that is we do have to need to have extensive offline coverage. So.
We can service customers and particularly the higher value customers that we can extract full amount you said database internally to cross sell upsell.
I have also mentioned in your opening remarks, so with a bolt on acquisition that somehow I think that really accelerates our.
Our efforts here rather than building it out organically and EBITDA.
I'm quite time consuming for cost to going to get your comments on on our own.
With respect to the regulatory has been.
When et cetera et cetera. So that's the first point here and the second point is that.
With respect to regulatory new environment, I think offline products.
It becomes increasingly important for us to distribute as well.
We are beginning to distribute a discharge.
Starting with <unk>.
Internal.
Sultan's Salesforce and now with the somehow bolt on acquisitions that would also.
Enable us to provide.
The cloud platform they've got already.
Quite a mature.
The pipe supply supply chain with respect to the insurance.
Products have been cooperating with 100 over 100 insurance companies and particularly the customized product that we have been distributing.
A successful basis these products can be channels.
Into the offline Agency force.
Connected to that somehow networks and.
And therefore, we can really streamlined your online to offline integration through the screen.
And then I can start point and we can also look forward to <unk>.
We thought even which.
Which is the independent agencies.
A framework that is now being put in place by cigar.
<unk> and I think this is a very interesting and attractive opportunity for a comprehensive one stop shop.
Digital insurance platform like ourselves whereby the independent agents can be tuck into.
Our ecosystem and therefore, leveraging on our online classes come. They can also provide front end services point of comparison.
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Intelligent proposals cause customers to our Cogs.
And also they can utilize our underwriting systems, our post policy claim.
Services.
To enable them to provide them to be spoken and.
Yes.
A fully digitalized.
Issuance of experience for their offline customer so I think all these things.
Things that we are looking to drive truly sponsor acquisition into the key ecosystem that we have already put in place over the years.
Hopefully that answers your question may be thank you.
That's very clear thank you.
Thank you. Our next question comes from Shan Wang from <unk>. Please ask your question.
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I'll now finish out auto first congrats to that impressive impressive results offer management in Q4 and I have two questions. The first one is about somehow so will our company continue to hire more agents abroad.
Brought our best at two.
Two more provinces and next question is about profit margins. So with the the margin has improved in Q4, so I'd like to know whether it's sustainable things, where you changed more product suppliers to large companies and there is still cost related to offline. After that so overall, we are in the market trying to take it all to be improved.
Compared with the.
Can you talk about level.
Yes.
Great. Thank you so much so two questions. The first question.
We expect to the offline business and whether we will be looking to expand.
I think yes, clearly suggests I think.
Right now I think we would probably be happy with this positive.
The first batch of patients that we have already put in place through this acquisition and I think that the second one.
Any comfort I would say.
Most of the key.
Insurance heavy or the top ranking.
And we get for market markets, but then I think there would still be a few areas. Maybe I think I think we can also look to expand into so I think you would do it.
On a metric basis, NFC and speak of one long put.
<unk> I think it was looking to expand further.
But we will be happy with the initial.
Companies that work that we have already.
Got it in place to this acquisition.
Secondly on the profitability of the company I think in Q4, we have turned a profit, albeit on a marginal profitability.
Uh huh.
We have also mentioned in the opening remarks, we do expect the next two quarters Q1, and Q2 will be extremely challenging.
From the operating perspective, not only I'll be adjusting to the new regulatory regime or new business models and also from a macroeconomic standpoint extremely challenging I think both of you.
I still have placed on the lockdown.
Shanghai Tang and semi lockdown and incorporate over the country Pakistan.
Our position also in kind of lockdown mode.
And I think that the.
The consumer covenants, which are very low level.
Due to the.
The quite massive layoffs that we have been seeing in the business.
Many industries, so I think that we have to pay a visit.
The impact on their willingness to to consume I think the question the financial products and within the financial clinics I guess insurance products are released.
The mortgage question thing of all so we do see it looks to us to be challenging. So I think we have not given any official guidance.
And I think we would be better.
That's what now and.
We would be.
Also in the opening remarks, we are.
Continuing our program of cost reduction the cost structure and I think that this is still coming on the priority in the <unk>.
Obviously, we would be further driving cost control driving down our fixed cost base and we have already achieved double digit percentage figure in the first quarter to date I think we will continue to drive further cost reductions in the second quarter.
Thank you.
Yeah.
Right. Thank you we have reached the end of the question and answer session I'll turn the call back to MS. Harriet her Investor Relations director for closing remarks.
Thank you operator, so in closing on behalf of Seo lasers management team I would like to thank you for Europe are these patients in today's call.
If you require any further information please feel free to reach out to us and thank you for joining us today and have a nice weekend.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for participating you may all disconnect.
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Okay.
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