Q1 2023 Huize Holding Limited Earnings Call
?
You you.
F.
Ladies and gentlemen, thank you for standing by and welcome to Who Is There? Holding Limited and welcome to Who Is There? Holding Limited.
first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After the management's prepared remarks, we will have the question and answer session. Today's conference call is being recorded and the webcast replay will be available. Visit the Whois.IR website at ir.whois.com
under the events and webcast section. And I'd like to hand the conference over to your speaker host today, Ms. Harriet Hu, who is the investor relations director. Please go ahead Harriet.
Thank you, operator. Hello, everyone. Welcome to our earnings conference call for the first quarter of 2023. Our financial and operating results were released earlier today and are currently available on both our IEA website and the news wire.
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 forward-looking statements.
Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained in our earnings press release and filings with the ACC.
Joining us today are our founder and CEO , Mr. Sunjun Ma, COO, Mr. Li Jiang, co-CFO, Mr. Ming-Khan Xiao, and co-CFO, Mr. Rong Tang.
Mr. Ma will start a call by providing an overview of the company's performance and operational highlights for the first quarter of 2023. Mr. Tam will then provide details on the financial results for the period before we open up the call for questions. I will now turn the call over to Mr. Ma.
Thank you for watching.
Thank you for watching.
Dam of hoom cushhinhim to work with before orgud an hangia. We like the tition media quiz power fugway. The G G townil have been choed us her time to tunure.
Thank you for your attention.
Thank you for your attention.
Thank you for your attention.
Thank you for your attention.
Thank you for listening.
S?ng y?ngshù y?u wè rénmì b? s?n yùy?. Huan b? zen n?n bái wen sh?u dian q?.
Thank you very much.
B center
those words.
In Zimbabwe, sur the edia And so on. quiteam turned out back the Sun, Sunday and Sun.
Hello everyone and thank you for joining with us for first quarter 2023 earnings conference call. In the first quarter of 2023, as China's economy gradually recovered and the private consumption and consumer confidence improved, the insurance industry showed clear signs of revival.
We leverage these positive trends by actively refining our product offerings and business strategies to strengthen our comprehensive online-to-offline O2O integrated digital insurance service ecosystem. As a result, Huizi reported another set of remarkable results in the first quarter of 2019.
RMB 1.93 billion, marking a 33.4% sequential increase.
Our total operating revenue and non-GAAP net profit also increased by 15.7% and 30.3% quarter-over-quarter to approximately RMB 300 million and RMB 18.4 million in the first quarter.
Some of it. You go like, if I'm here, train put you that on mchichigan. Yield the goldge around and the easy to show them per of can be halfough with. Have an over body in your, but remain you and you U an.
Now let's move onto the next topic, toppedomestyle.
went into. Byatives are not. Who she ancient number of varieties. And then see you. The attention of a user to Thank you for your attention.
Thank you for watching.
Thank you for watching.
In terms of product mix, first year seniors or FYT facilitated on our platform increased by 58.6% sequentially to approximately R&B 600 and 60 million.
FYP of our long-term health insurance product and savings product increased by 32.8% and 50.4% quarter-over-quarter to RMB 180 million and RMB 340 million respectively.
Highlighting the high-quality growth driven by our comprehensive product offering.
At the same time, we continue to benefit from our strategic focus on distributing long-term insurance products and the competitive age we have established.
GWP contribution of our long-term insurance product was 92.7%, marking the 14th consecutive quarter above 90%. Renewal premiums also demonstrated significant growth, rising by $2.5 billion.
23.2% sequentially to RMB 1.27 billion.
Get an easy little MO pinhead LAD did. How about y cobola bara iswhy on the hurking tonguek? Y white youngn't Bo you.
It's easily without completion. The Englandos, are thinking youmaster the obvious accounts.
convenian W science. Financial functure. withthe TE transfer into ity charge, TE book Sha us should M V D transi and changing W.
stylish on a stickyYes. Torture sur EL
Again, please respect us. If you have been informed and updated on the exercises, we
At the end of the first quarter, our cumulative number of insurance clients reached 8.7 million.
We remain focused on targeting high quality customers for our long-term insurance product.
During the quarter, about 66.2% of our long-term insurance customers were from higher tier cities with an average age of 33.9 years old.
In terms of FYP, the average ticket size of long-term insurance product and savings product was approximately RMB $4,000.
RMB 4,000, RMB 120, and RMB 44,000.
During the quarter,
during the quarter, during the quarter
Demonstrating our success in unlocking the lifetime value of our users and indicating a positive trend in user engagement. As of February , our cumulative persistency ratios for long-term insurance have been reduced to a 1.5% increase.
in the 13th and 25th months remained at industry high levels of more than 95%, indicating that our high-quality customers show a high level of stickiness and continue to generate stable revenue strength for both Huizhou and our insurance partners.
J EAS little more wheither. You E an near the jap. An mon way should, when dinner followllow W she EAS you to one ong had a planning. Who, her children, who y good periia are on bora cur and then jg, during which you really than up.
So you do you sit on cancer
We immediately?? autorbités to spur a??, to assist infilticheries, cinemas and three-day regressive-showrents. We ?? suffered a dramatic loss. People suspected being holed away from Argentina.
Round young Ho and go E jging with down with like we are young about her, but I hood UN. So where war may paren janhhim do to the tunan tuny ER boia pingia arnam bdon riabout judginghim about to Cook je kongshammy my Ha. And should I show dollar young Ho, the she T her honeyer and her.
Hope him with an azan and the don't get changinger So by E of you sh time he, if you, to changinger him in the prit canamp power iter. We don't WA by vwhen Le should be eat.
As of the end of the first quarter, we have cooperated with 104 insured farmers.
During the quarter, in response to the increasing demand for insurance coverage for children and the huge mortality protection gap, we launched Xiao Tao Qi number one, a customized child critical illness insurance product and Xing Hai Zhu number three.
a customized term life insurance product, both of which cater to the protection needs of younger generation customers.
Additionally, we launched Xima Izu No. 3, an increasing whole life insurance product with the option to convert the policy between single and joint insurance, providing flexibility for customers with pension and inheritance planning needs. We also partnered with Pinan Health Insurance.
to co-develop Changqiangan, a cost-effective customized long-term medical insurance product that offers guaranteed policy renewals for 20 years, discounts on family subscription, and family deductible benefits.
This product was well received by both customers and the industry and was named one of the most popular medical insurance products designed by Insurance Intermediate in 2023.
In the first quarter, GWP of our customized product accounted for 60.1% of total GWP.
of our customized products accounted for 60.1% of total GWP.rible
Please subscribe to our channel and share this video with your friends.
If you have any questions, please feel free to contact me. I will be happy to answer any questions you may have. Thank you. If you have any questions, please feel free to contact me.
Don feel 't side down B after they art she don't show. Feel me CAn't be side up B an, an or angeial, or don't choose you jms to Tony the eat changing jump, then take God oun K ok, oks. So you find not, should pment.
In the first quarter, our growth margin reached 39.8%, up by 2.6 percentage points sequentially.
The increase can be attributed to a reduction in our customer acquisition cost due to our successful OTO integration and the refined user management strategy.
Meanwhile, we continue to maintain effective cost controls and optimize our organizational structure. As a result, our total operating expenses decreased by 20.2% year-old year, and our selling expense to incongruation declined by...
5.9 percentage points on a year-over-year basis. Moving forward, we will mention our this planned approach to cost control and continue improving operational efficiency to achieve sustainable business growth.
E you though, or MA aterpeople to sh hunk M J Ian hful, the timeer bujget Don ion W sh hunchangchange are long for the pousian PO in patation B Bo him P? E that trm was's sinceal.
Pay Bay. I are food and they the avan quizzter about our dudy thatin and seanjiri tombangu thatin and quest to SA y hot hammilick Jes Z tun hyong go chjo.
whether the trust Witchesandestine the lottery and feeding theSheldon youth disability program, and pointing out the
With Co? Od you won't prly the full use of hunure that on to you go. Should E another J to time, or maybe even 100 the syindthen try change our time into the other. You RO easy to your. Every year we have children. The syang of it does remembe.
che En sobat kir bawak EU toong or chuna tranya adraan sindan. Bab V, the semmony.
We also wrote out our online purchase of line service strategy to deepen the O2O integration of our insurance service ecosystem during the first quarter. That's far, we have six-
successfully established offline service teams in 16 key region nationwide.
In a Q&A segment, we capitalized on the market opportunities presented by independent agents and empowered them with product filtering tools and real-time insights into customer needs.
We also provided insurance agents with efficient professional support, enabling them to effectively acquire and engage with customers and deliver the utmost professional services.
Moreover, we have expanded our localized operations to more regions and commenced product offerings in these regions.
In the first quarter, FYP facilitated by the 2A business, which R&B, 74.8 million, equivalent to one-third of the FYP from the 2A business in 2022, which demonstrates the increasing importance of our 2A strategy to our overall
To huning Jago cal who the ficial J you hate. Try other timemping of who punctction. Or jing say I on freedom, young the two I ING work. The Audi is sume with her qu ding go the Indian 30 Ha easy to or to shang you Re doing B don't yellow lotation, then botom So the who'.
Ac better use, 338000?? Or should cost around $ 10,000 Un regimes
In a QC segment, we continue to refine our operations with a strong emphasis on compliance and the strategic focus on customer acquisition, retention and activation. To better serve our customers, we have deployed sophisticated algorithms that effectively integrate
18 distinct indicators of customer demand across four dimensions, allowing us to analyze customer demand across various scenarios and make targeted recommendations of the most suitable product and services. Thank you.
In addition, we leverage our comprehensive CRM system to track customer outreach, analyze customer behavior and feedback, and develop tailored follow-up strategies and solutions.
In the first quarter, through targeted promotions, branding, and customer engagement activities, we reached more than 70,000 users and achieved more than 10,000 sales conversions.
At the? station line sagging towards construction, be bist?????, while protecting direction and dominance pushing past the relatively heavy sudden release of speed
Okay, we started last time and I which was the fistmonella first. I enjoyed listening to the feedback from the rest of the people. During this session, I would like to share the data on native languages. we can also graph it
or tweet on our favorite YouTube channel daily, before finding a phone call. That's it. Thank you.
As the insurance industry undergoes gradual reform, digitalization and the independent aging business model will act as new growth drivers. We are confident that the insurance intermediary market will sustain the strong growth in the future.
To capitalize on this trend, we will consolidate our core strengths as the leading insurance intermediary platform, strengthen our cooperation with our insured partners in areas such as strategy, operations, and processes.
provide customers with the most suitable products and services to meet their needs, and drive deeper integration of our O2O ecosystem to enhance customer experience. Our primary goal is to fulfill the long-term protection needs of our customers while achieving sustainable revenue and net profit growth.
Thank you for watching.
This concludes my prepared remarks for today. I will now turn the call to RSCF for Mr. Ron Tam and he will provide a no review of our key financial highlights for the first quarter.
Thank you Mr. Ma and Harriet and good evening to the audience in the Asia time zone and good morning for those in the US.
In the first quarter, the insurance industry in China experienced the gradual recovery, which is in line with the improving consumer confidence and household income.
As operating conditions have improved, sector-wide close-button premiums increased 9% year-over-year to a number around 1.6 trillion RMB.
Leveraging our omni-channel distribution ecosystem, we have achieved business growth that far outpaced and outperformed the overall market trajectory. We delivered a 44% year-over-year and 33% quarter-on-quarter growth in total GWP facilitated on our platform.
which has reached RMB 1.9 billion in the first quarter. We've also added 300,000 new customers to our ecosystem in Q1, which brings the total number to 8.7 million by the end of the first quarter.
During the period, we have recorded a non-GapNet profit of RMB 18 million, which is a second straight quarter of profitability.
putting us on track to meet the full year non-gap net profit guidance of RMB 30 million, which we have given out to the market last quarter.
This assess can be attributed to the successful execution of our key business strategies.
Firstly, we continue to our strategic focus on long term insurance products. With the GWP contribution from long term products remaining at about 90% for the 14th consecutive quarter.
Secondly, we continue to target high-quality new generation consumers and empower insurance agents throughout our omnichannel distribution platform, extensive product offerings, and advanced technology. Our 2A2C business line generated a very solid quarter, with total FYP of RMB 75 million alone in the first quarter.
key highlights and takeaways from this call as operating results.
First, total CWP increased by 33% sequentially, which is 1.9 billion RMB. This growth was driven primarily by a quarter-on-quarter increase in both first-year premiums and renewal premiums of 58.6% and 23.2% respectively.
Second, our persistency ratio for long-term life and health insurance remained at an industry-high level. As of February , the 13th month persistency ratio stood at 97% and the 25th month persistency ratio stood at 96%.
And third, the average ticket size for long-term savings insurance products was RMB44,000 in the first quarter.
This continues to reflect the sound quality and high potential lifetime value potential of a customer base. These overall positive metrics were primarily driven by our continuous efforts to deepen our user engagement and also convert upselling opportunities.
In the first quarter, we saw a notable recovery in demand for long-term health insurance products, with FYP for this category increasing by 33% sequentially. We have also maintained our market leadership in long-term savings products and solidified our position in that market segment. The GWP contribution of our long-term insurance products remained above 90% for the 14th quarter.
Looking ahead, we anticipate a more balanced product mix between the long-term health and long-term savings categories, which aligns with our evolving customer needs and with the market dynamics in the China context.
The recovery in FYP helped drive a 16% sequential increase in our total operating revenue, which has reached RMB299 million in the first quarter.
We remain very focused on tightening our marketing channel costs and optimizing our group-wide structure to improve our product margin and operational efficiency.
As a result, our operating costs in Q1 increased at a slower pace than revenue, rising 11% Q1 to RMB 118 million.
This has led to a healthy improvement in the gross margin to 39.8% from 37.2% in Q1.
In Q1, total operating expenses decreased by 20% yield for a year.
Our GAAP net profit and non-GAAP net profit were both approximately RMB 18 million in the first quarter, and this translates to a non-GAAP net margin of 6.2%.
As of the end of the first quarter, we continue to maintain ample liquidity, as evidenced by a combined balance of cash and cash equivalents of RMB 230 million.
We've continued to repurchase shares from the open market under our existing share repurchase program and that's at the end of the March quarter we repurchase and aggregate.
in this year, year to date, approximately 484,000 ADSs, which demonstrates our management's continued confidence in our business model and our long-term growth prospects.
Moving forward, we will strengthen the integration of our OTO ecosystem. This should help us gain market share among high-quality, new generation consumers, and solidify our position as a top-tier insurance intermediary in China. We will also focus on providing a wide range of products and services across all scenarios, and empowering independent agents and our insurance partners.
As we improve our operational efficiency and allocate our capital more effectively, we will strive to enhance shareholder value and achieve sustainable business resilience.
Now, turning to our outlook for the year, we remain optimistic regarding the sustained recovery in the domestic economy, consumer confidence, and consumption activity in China, which should provide a further boost to the insurance industry.
With an anticipated macro recovery, our improved operational efficiency, our ability to continue to attract new mass affluent consumers, and our efforts in sales conversion and upselling, and in light of the better than expected performance in the first quarter, we are now revising upwards our outlook guidance and currently expect to achieve it.
non-gap net profit of not less than 50 million RMB in 2023. And with that we close the we will now open up the call to questions. Thanks and over to you operator. Thank you dear participants. As you are reminded to ask a question you need to press star 1 1 on your telephone keypad and wait for your name to be announced. To withdraw your question
Dear participants, please state your question in Chinese language first and then in English. Now we're going to take our first question.
And the first question comes from the line of Yu Yu Zhang from CIECC. Your line is open, please ask your question.
Ing the both recent is no woman. But you go cent party because ber potentially Ind vid. Take doar y to 20 I milk financial MO. ial cannot even been high, should high. She also also compact.
I've got two questions and the first one is about the current product mix. So could you give us some more details on the product mix based on FYD in the first quarter with the proportion of saving products? And the second one is about the gross momentum. We know that previously China's insurance regulator has offered insurers to
in the first quarter and now we are at the end of May. So is there still a recovery? Thanks.
Thank you. It's Ron here. So regarding your first question on the FYP product mix in the first quarter, I think that we can break it down for you. So we have a total of 661 million of FYP and of that roughly 180,000 of them are in the market.
million is coming from protection, so coming from long-term health and term life products. So that 180 million number represents about 32% quarter-on-quarter growth. So that will give you some sense of the recovery in the long-term health space. And 340 million roughly is from...
long-term savings segments which includes the increasing full life category and also the annuity category. That number has increased by 50% quarter-on-quarter versus Q4.
Roughly around 28% of the FYP in Q1 is from protection, roughly 51% of the FYP is from long-term savings.
So that will be the product mix question.
With respect to the second question on the downward revision on the so-called guarantee return from 3.5 to 3.0 trend and how is that impacting sales, I think what we've seen in a second quarter is we are actually seeing increasing momentum of sales in the second quarter with respect to public imminence
imminent transition to the 3.0% product pricing. So I think Q2 we should probably expect to see a larger increase in sales of this product versus quarter one. But then going forward into the second half of the year what we've seen in quarter two as well.
I think the market transitions from the increasing whole life product into annuities and that's what we're expecting to see as an industry trend in China. But then in terms of the product mix for the second half, we probably will be seeing more balance mix between protection and savings as likely the...
the early consumption of savings products would mean that there will be more personality effects from the first half versus second half in 2023 for the savings product category.
So that will be the second question. And the third question regarding the long-term health, the protection product momentum. Q1 we definitely see a relatively robust recovery from Q4 of last year. Q4 was definitely very challenging from a macroeconomic standpoint in China. So Q1 we see that with consumer confidence recovery with increasing overconsumption.
insurance property has been a beneficiary of the overall confidence at household income recovery. So Q1 we see a relatively robust recovery momentum. In Q2, we see that continuing, but probably the pace of the growth would be somewhat more lukewarm than Q1. But then I think that the long-term health...
category as an absolute amount for quarter two would probably be more or less around the same level as Q1. But then I think longer term we see that we've continued recovery in the macroeconomic picture and we've continued improving in consumer confidence. We do expect long-term health.
protection products to increase in terms of the proportion of the product mix in the second half of the year. So I think that would be the answer to your third question.
Thank you. Now, we're going to take our next question. Please stand by.
And the next question comes to the line of Amy Chan from CTO. Your line is open, please, after question.
Hi, this is Bini from Citi and first I want to congratulate the management on such a robust sequential growth in the first quarter. So my first question is regarding to the increasing whole life product. I'm just wondering what
percentage it accounted for in terms of FYP and GWP, which was only facilitated in the first quarter as well as year to date.
And in going into the third quarter and the fourth quarter, what kind of products mix are we looking at?
And the second question is on brokerage income. If we look at it on a year over year basis it's actually relatively flat. But actually we logged a very robust FYP growth in the first quarter. I'm wondering if whether this has something to do with
your 2A channel and then agent channel.
Thank you. Okay, thank you. So the two questions, I think the first question we probably have touched upon in the response to the question just now from CICC. So the increasing whole life product in the first quarter.
I think in terms of our public disclosure, we have lumped together the long-term savings product categories, which includes the increasing whole life and the annuities as a whole. So this category has accounted for 51%, 5% 1% of our FYP for the first quarter. And if you are asking about the outlook for the rest of the year, I think in Q2, we'll probably see...
higher proportion of IFIB coming from the increasing whole life slash annuities categories, probably more than 51% in the second quarter, but then that will come down in the second half as we transition to the new product pricing landscape as we all know from 2.5 to 2.0.
So in Q3 we will see probably relatively weak sales of long-term savings in the increasing whole life segment, but then we do see that a complementary makeup from the annuity product as we see that the growth momentum in the annuity category continues to be quite strong in Q2, year to date.
So, second question on the brokerage income. Yes, we do acknowledge that the year-on-year growth on the brokerage income side is where to be flat. I think that has to do with mainly the lower commission rate, in particular with the savings product category.
from this quarter versus the same for last year. So I think that the solar tick rate decrease has been the main contribution factor to the right to be flat performance in brokerage income from last year to this year.
Thank you. Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced.
Please state your questions in Chinese language first and then in English. Now we're going to take our next question.
And the next question comes to Lan of Jia-Mou Li from Guo Tai Junan Security. Your line is open. Please ask your question. Your line is open.
Pd because has money con to the T being only UN going gener when he de and he should run twent dollar go's. And there she, she because seen uncle J himself would J because know how to 10 something run UN CE. The government is self.
to the to show the government and just legal and the the the the the the the
Your leave body, you should about your honey, like on how the cassing the whole ok, or may the idea you should consid that whole Co from you, your MA or Leas, that you see, done you that whole on me on your own actually, you to ATE to your harm, and that you coouple Ho numberum? ber. No way about you. You are one and another thing is that, like my first question, is your ll mention that you have.
deployed an online purchase, offline service strategy. So could you elaborate more on this strategy and what do you aim to achieve with this strategy? My second question is, your major peers have moved towards creating health and insurance or medicine and insurance to facilitate customer acquisition. So what are your key customer acquisition strategies and how do you plan to optimize?
This year we'll be able to accelerate the development of this finally after the post-COVID era where we can really push things on the ground and to deploy human resources over the country. So by now we have already deployed significant human resources.
on the ground in over 17 provincial areas in China. So with respect to the specific locations, in addition to your traditional T1 and upper T2 cities, which we all know, and which will be necessary coverage for us already, we've further expanded our geographical coverage to places like Hubei.
So these areas are also represented as top 20 GDP per capita regions of China, and these are the important areas where we want to expand our offline coverage from a services standpoint. Thank you!
So to put expand on our strategy, I think we have already accumulated 8.7 million customers, paying customers on our platform. And we have reached to a point where we want to further improve our ability to service these customers and to further try to upsell these customers for higher value products, which includes insurance products, which also includes other products.
for example, healthcare services, elder care services. And with the offline locations, we are now able to have a face-to-face interaction with these high-value customers that we can try to upsell. And therefore, we will be able to further maximize the long-term value, the LTV potential of these high-quality customers, which we all have been witnessing.
in the last two years we have started from a relatively lower ticket size protection product, you know, the 4,000 RMB kind of critical illness product. Now we're already selling 40,000 RMB type of savings products like the long-term whole life insurance products. So we are seeing that trend continue as our customers further mature and further accumulate wealth and we're able to, if we were able to service them in an offline context.
We were able to connect them with a higher premium customer service or agent. We were able to further increase the lifetime value potential for our customer base. So that's one very important element of the strategy. The second element of the strategy is the new 2A2C business line that we have.
starting from last year, which have already surpassed 200 million of RMB for the year alone last year, and now we're already seeing almost 100 million in the first quarter. So that new business line has picked up momentum, and with the new offline coverage, this will further accelerate the connectivity that we have with the local regions.
where the local agents can also have the local presence with our platform, therefore be able to service the local region customers more effectively. So that will be the second point on the online to offline strategy. So I think overall we've always been trying to...
leverage on our online presence from a product supply standpoint, from a services standpoint, and from an overall branding perspective to empower all the agents, the in-house agents that we have on our 2C segment. Our 2B, 2C segment includes the third-party channel partners, the KOLs and the wealth management channels. And now the 2A, 2C.
channels which are the independent agents over the country are now realizing the synergies that they can extract from working with Fraser as a platform provider. And we've seen that translating into the global momentum and into our top line results as we haven't shown in the last five quarters since the start of 2022.
So that would be my answer to your first question. On your second question on the the ecosystem approach, whether we want to improve not just from an insurance standpoint, but also providing other services like health care and elder care, we've actually already been investing in this regard. We have been quietly investing in our own
healthcare services platform. We actually have been trial testing this healthcare platform internally, and we will be voting this out probably when it's more mature in the second half of the year to provide healthcare services which are higher frequency in nature and also will be allowing us to further extract wallet share from our existing customer base.
I think we are also able to derive synergies from a mainland Chinese customer-based perspective with our Hong Kong product providers and to provide that linkage to facilitate the MCV business in the near future. So I think that will be another exciting prospect for Huizhou as a whole and we will work to provide further information on this business line as it becomes more scalable.
Thank you.
Thank you.
The speakers are not for the questions at the time and I would like to hand the conference over to our management team for any closing remarks. Thank you operator. So on behalf of HUIS's management team, we would like to thank you for your participation in today's call. Thank you for your participation in today's call.
And if you require any further information, please feel free to reach out to the IRT. And thank you for joining us today. This concludes the call. Thank you, everyone.
This concludes our conference for today. Thank you for your participating. You may now all disconnect.