Q4 2023 Huize Holding Ltd Earnings Call
Operator: Ladies and gentlemen, thank you for standing by, and welcome to Huize Holding Ltd's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode.
Okay.
Ladies and gentlemen, thank you for standing by and welcome to hoist, a holding limited's fourth quarter and full year 'twenty two 'twenty three earnings conference call.
At this time all participants are in a listen only mode. After the management's perpetual marks who will have a question and answer session.
Operator: After 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 Huize's IR website at ir.huize.com under the events and webcasts section. I'd now like to hand the conference over to your speaker host today, Miss Harriet Hu, Huize's Investor Relations Director. Please go ahead, Harriet
Today's conference call is being recorded under webcast replay will be available.
Please visit <unk> IR website at IR <unk> com.
Com under the events and webcast section.
Now I'd like to hand, the conference over to your speaker host today, Ms. Harriet too well is just Investor Relations Director. Please go ahead Harriet.
Harriet Hu: Thank you, Sarah. Hello, everyone, and welcome to our earnings conference call for the fourth quarter and full year of 2023. Our financial and operating results were released earlier today and are currently available on both our iO website and the newsletter. 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 follow-up statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained in our earnings press release and filing with the FDC.
Thank you.
Hello, everyone and welcome to our earnings conference call for the fourth.
Yes.
All financial and operating results.
Ernie.
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Before we continue I would like to refer you to the Safe Harbor statement.
Which also applies to this call I can all be Nikki.
These statements are based.
Also note that we will discuss non-GAAP measures today, which are more thoroughly.
Our earnings.
Thanks Wendy.
Harriet Hu: Joining us today are our founder and CEO, Mr. Cunjun Ma, COO, Mr. Li Jiang, Co-CFO, Mr. Minghan Xiao, and Co-CFO, Mr. Ron Kang. Mr. Ma will start the call by providing an overview of the company's performance and operational highlights for the fourth quarter and full year 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. Hello everyone.
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Mr. MA will start callbacks regarding enough with the company's performance.
Operational highlights for the fourth quarter.
Yeah.
It's a time for them to provide detail on our financial results for the theory before we open up a powerful culture.
I will now turn the call over to me.
Cunjun Ma: Welcome to Huize's 4th annual annual sales conference for the 4th quarter of 2023. In 2023, China's insurance industry will continue to improve and achieve a deep transformation in the industry. In the past two years, especially in an environment where interest rates are falling, customers in the market continue to have high demand for savings. It also led to a 12.75% increase in risk-taking business insurance income. The confidence index of Chinese insurance consumers is also clearly recovering. Consumers' confidence in the macroeconomic and industrial environment continues to recover. Among them, Zeng Bao's will has been resurrected three times in a row, higher than the same number in 2021 and 2022.
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Cunjun Ma: Thanks to Huize for adapting to the market trend, we have seized the opportunity to grow in the savings area, relying on the long-term strategy, diversified business layout, product innovation, and customer ability, etc. The core advantages have once again achieved their ideal level of improvement. Hongbi has increased by 18% from YouTube. [inaudible] 3.3% to 1.2 billion.
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Cunjun Ma: $7,230,000, Chao Yuqi, Holder, and 4-Year 2028 Earnings Conference Call. In 2023, China's insurance industry continues a positive growth trajectory, marking the second consecutive year of growth following the industry's significant reform. In particular, the demand for savings insurance products remains robust.
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Hello, everyone and thank you for joining us.
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In 2020 suites, China's insurance industry continues the positive trajectory, marking the second consecutive year following.
Following the industry significant reform in particular, the demand for savings insurance product remains robust.
Cunjun Ma: Driving a 12.75% growth in total premiums for China's life insurance industry amid the declining RMB interest rate, the China Insurance Consumer Confidence Index also reflected a resurgence in consumer confidence toward the macroeconomic environment and the insurance industry. Notably, the intention to increase insurance coverage has responded for three consecutive quarters, surpassing levels seen in the same period of both 2021 and 2022. Navigating through this evolving market trend, Huize has successfully seized market opportunities in long-term savings products. By leveraging our strategic focus on long-term insurance products, diversified operational tactics, product innovation, and customer acquisition capabilities, we have once again delivered satisfactory results. In 2023, Total Growth Returns Premium, or GWP, facilitated on our platform reached RMB$5.8 billion, up 18.2% year-over-year. Our total revenue increased by 3.3% year-over-year to RMB$12 billion, and we achieved a non-net profit of RMB$72.3 million, exceeding our guidance of RMB$60 million.
Driving a 12 12.
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The declining interest.
Interest rate.
The China insurance consumer confidence index also reflective of resurgence in consumer confidence towards the macroeconomic environment and the insurance industry.
Notably in Asia to increase insured insurance coverage has responded or.
Second quarter, surpassing level thing in a sense here at.
2021 'twenty 'twenty Q.
Navigating the evolving market Chad what it does at this point the market opportunities in long term savings products.
Our strategic focus on long term insurance products.
Operational tactics product innovation and customer acquisition capabilities, we have once again delivered.
As a result in 2023 total gross written premium or tw facilitated on our platform reached RMB five 8 billion up 18, 2% all.
Total revenue increased by three 3% year over year RMB.
And we achieved a non-GAAP net profit of RMB 72 3 million.
A minute exceeding our guidance of RMB 60 million.
Cunjun Ma: According to the structure of insurance, in 2023, Long-Term Insurance accounted for 92.3% of the total ratio of insurance and accounted for more than 90% for four consecutive years. Among them, the first-year insurance increased by 4% and reached 26.2 billion yuan. The total insurance fee increased by 4% to 31.8 billion yuan in the same year.
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Cunjun Ma: In the year, under the market situation where savings insurance demands were concentrated, the rule of choosing a diversified product supply and a full-channel distribution capability contributed to the total insurance fee of the new single insurance for savings insurance of 16.5 billion yuan, which increased by 54.6% in the same year. The new single insurance fee for long-term health insurance is about 5.1 billion yuan, which increased by 19% in the same year. On the other hand, while the long-term insurance business continues to grow at a high level, Huize is a company that provides risk management solutions and exclusive customer service for business customers. The share price of Xindan Baofei, which provides real estate and foreign exchange, has increased by 74%, reaching 3.9 billion yuan.
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Cunjun Ma: Our FYT facilitated on our platform reached RMB 2.6 billion, up significantly by 42% year-over-year, and renewal premiums increased by 4% year-over-year, reaching RMB 3.2 billion. In terms of product mix, the GWP contribution for long-term insurance products in 2023 was 92.3%, representing the fourth consecutive year exceeding 90%. During the year, we witnessed a rise in demand for savings products and leveraged our diversified product offerings and omnichannel distribution capabilities to capitalize on the market opportunities. In light of that, FYP from our long-term savings product increased by 54.6% year-to-year to RMB 1.7 billion.
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Uptick significantly by our 42% year over year and renewal premiums increased by 4%.
Reaching RMB, Switzerland, you bet in terms of product mix. The key there would be contribution from long term insurance product in 2023.
Finally, Q3 percent, representing the fourth consecutive year exceeding 90% during.
During the year, we witnessed a rise in demand with daily.
And leverage our diverse product offerings, and omnichannel distribution capabilities to capitalize on that market opportunity in light of that FY <unk> from our long term savings products increased by 54, 6% year RMB, one 7 billion.
Cunjun Ma: And FYP from our long-term health products increased by 19% year-to-year to RMB 510 million. Meanwhile, while we maintain high quality growth in our long-term insurance business, we also provided customized products and risk management solutions to our corporate clients, which led to a 74% surge in the FYP of our PMC insurance product, reaching RMB 390 million in 2023. ,... 9.3 million users in the fourth quarter Long-term users of Taobao, 65.8% of users in the second-tier and above cities are 34.1 years old on average. 41.8% of users used to be on the platform.
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While we maintain high quality growth in our long term insurance business.
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Cunjun Ma: The proportion of purchases has increased by 8% from the same period last year. At the same time, Huize's operating users, As a result of the rapid expansion of the high-value Hong Kong-based business in the fourth quarter, the number of construction workers in Chuxi County has increased significantly, from about 30% to 590,000 yuan per unit. As of the end of December, the cumulative demand for the 13th month and the 25th month in Chuxi County has increased by more than 95%, and the industry continues to maintain a high level of demand. As of the end of December, our accumulated number of insurance customers exceeded 9.2 million. Among the long-term insurance customers from the post-quarter, 65.8% were from higher tier Cs, and their average age was 34.1 years old. Additionally, 41.8% were repeat purchases from existing customers, which has increased by 8 percentage points year over year.
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Cunjun Ma: We also witnessed a substantial increase in the fourth quarter in the average ticket size of saving products in terms of FYP, which was approximately RMB 59,000, representing a 30% increase year over year. This was primarily driven by our focus on acquiring high-quality customers and upselling existing customers with high LTP potential, as well as the success of our Hong Kong business extension, contributing premium international product sales in the fourth quarter. As of the end of December, our accumulated persistence ratios for the long-term insurance in the 13th and 25th months remained at industry-high levels of more than 95%.,Huize 123,,,, 11, Unknown Executive, Yuyu Zhang, Windy Gao, Wenwan Gong, Huize Holding, 8090,12, Huize8 Thank you.
Also witnessed a substantial increase in the fourth quarter and the average ticket size of saving product in terms of FY <unk>.
Which was approximately RMB 15, 9000, representing a 30% increase year on year.
This was primarily driven by our forecast.
Acquiring high quality customers and upselling existing customers high LTV potential as well.
Our Hong Kong business expansion contributing premium national product sales in the fourth quarter.
I felt the end of December our accumulated persistence ratios for the long term insured in the 13th and 'twenty six months remained at industry high level more than 95%.
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Cunjun Ma: [inaudible] We have reached 310,000 customers with the Da'anwen series products. In 2023, 61.6% of customized products will account for the total insurance fee. We have cooperated with 123 insurers. Throughout the year, we maintain solid collaboration with leading insurers, further enriching our diversified product matrix in order to meet the differentiated protection needs of customers, whether they are in search of premium brands or cost-effective products. For example, in November, we partnered with Dajia Amnuity Insurance to launch Dajia Guixue, a customized retirement amnuity insurance product addressing the unique needs of the post-80s and 90s customers by offering elderly care services and various types of protection options. In December, we partnered with PICC Life Insurance to launch the Darwin Critical Care No. 8 event.
On June 23.
Throughout the year, we maintain solid collaboration.
The company further enrich our diverse product nature in order to meet that differentiate protection for our customer whether they are in search of premium brands or cost effective products for.
For example in November we got last week, John annuity insurance, you launched chocolate chip a customized retirement.
ECS product adjusting their unique needs of the post 80, and 90 customers by offering an elderly care services and salaries.
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It launched in 2018, the Darwin cryptocurrency theorist products provided over 310000 customers with enhanced protection through a higher limit broader coverage and better service quality in 2023 that he doesn't be contribution from that.
Cunjun Ma: Since its launch in 2018, the Darwin Critical Care Series products have provided over 310,000 customers with enhanced protection through higher limits, broader coverage, and better service quality. In 2023, the GWP contribution from our customized insurance products was 51.6%. In 2023, the new guarantee fee generated by the RFA platform reached 3.5 billion yuan and increased by 73%. The number of core agents in the studio increased by 106% in 2022.
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Cunjun Ma: At the C-end, we are targeting new users.,,,,, [inaudible] As we continue to gain more users, we will continue to operate and serve our users in a deep way. In 2023, Huize will have more than 1 million families. Yuyu Zhang's 11 million yuan insurance program provided professional insurance services and assisted 920,000 clients to pay their dues. The total payment amount was 5.7 billion yuan.
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In 2023 X Y Z facilitated by our independent financial advisors or platform reached RMB 850 million got it.
It doesn't mean, a significant increase up 70 of 73% from the previous year.
Number of high performing.
<unk> increased by 106%.
In our direct to consumer segment, we launched a series of promotions and marketing initiatives to engage potential in high value customers.
Cunjun Ma: FYP is facilitated by our Independent Financial Advisors, or IFA platform, which raised RMB 350 million, representing a significant increase of 73% from the previous year. The number of high performing IFAs increased by 106%. In our direct-to-consumer segment, we launched a series of promotion and marketing initiatives to engage potential and high-value customers, which effectively reduced customer acquisition costs and boosted conversion rates. As we expand our customer base, we continue to remain highly committed to deepening our engagement with existing customers. In 2023, we served more than 1 million families with over 11 million insurance policies and assisted with 92,000 insurance plans, amounting to a total planned settlement of RMB 570 million.
Which effectively reduced customer acquisition cost and booked it.
Conversion rates.
We extend our customer base will continue to remain.
It's highly committed to deepening our engagement.
With existing customers.
In 2023, we serve more than 1 million summit with over 11 million insurance policy and assisted with 93000 insurance amounting to a total of planned settlement of RMB 517 million.
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Cunjun Ma: ????????????????????,??????????????? ????????????? ??????????????? ?????????????????????????? ?????????? ?????????????????, to provide high-end insurance services to high-value users. [inaudible] will contribute 6% to Hong Kong's insurance economy. ???????????, We are actively exploring the insurance market opportunities in Southeast Asia. The data shows that in 2022, Asia's emerging markets have an average inflation rate of 3.6%, and the life insurance inflation rate is only 2.1%. Among them, the inflation rate of insurance companies such as Vietnam and Indonesia is lower than 1% to 2%.
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Recognizing the growing demand for premium insurance.
At the application, we took action to rapidly.
Cunjun Ma: We believe that Huize's business model has been verified, and we can replicate our success in China. With the growing income of the population, the insurance market in these areas has huge potential, and Overdue at the Outskirts. We took action rapidly and seized opportunities in the Hong Kong insurance market, which has allowed us to diversify our revenue streams, bolster our operational resilience, and enhance our risk management ability. During the year, we partnered with China Pacific Life Insurance Hong Kong to co-develop the Tima Indu multi-currency product. With the extension of our product portfolio, we have also extended our Hong Kong insurance brokerage business, creating a comprehensive suite of high-end insurance services tailored for high-value customers. With the resumption of cross-border travel, we saw a substantial surge in the scale of our MTB business.
Opportunities in Hong Kong insurance market.
Which has allowed us to diversify our revenue stream bolster our operational resilience and enhance our Madison facility.
During the year, we partnered with China Pacific Life insurance from pop to co develop <unk>.
Multi currency product.
With the extension of our product portfolio. We have also extended our Hong Kong insurance brokerage business.
Creating a comprehensive suite of high end insurance services tailored for high value customers.
With the resumption of profile that we.
We saw a substantial surge in the scale of our MCC business. The revenue contribution from our Hong Kong brokerage business already reached 6% of our total revenue in the fourth quarter beyond Hong Kong, we are actively exploring insurance business opportunities in southeast Asia.
Cunjun Ma: The revenue contribution from our Hong Kong brokerage business already reached 6% of our total revenue in our fourth quarter. Beyond Hong Kong, we are actively exploring insurance business opportunities in Southeast Asia. Market statistics show that the average insurance penetration rate of Asia's emerging market was 3.6% in 2022, while that for life insurance was only 2.1%. In particular, the insurance penetration rate in Vietnam and Indonesia was at a low level, ranging from 1 to 2%.
It shows that the average insurance penetration rates up Asia emerging market.
<unk>, 6% in 2020, Q well that's life insurance was only two 1% in particular, the insurance penetration rate in Vietnam, and Indonesia was at a low level ranging from 1% to 2%.
We believe that the proven success of our business model can be replicated overseas, especially excuse for emerging market, whereas the per capita disposable income continues to rise we.
Cunjun Ma: We believe that the proven success of our business model can be replicated overseas, especially in suitable emerging markets where the per capita disposable income continues to rise. We see that the potential in the insurance market in this region is massive, and we believe we are in a good position to capture this opportunity. Finally, I would like to share with you the progress Huize has made in the development of the insurance AI model. Huize has accumulated more than 60 million insurance users, and it has accumulated a large amount of user data and product data. [inaudible] [inaudible] A, A, For example, the Yenching calculator can automatically perform Yenching research to shorten the time for the consultant to make a savings product proposal to a few minutes.
We see the potential in the insurance market in this region is massive and we believe we are in a good position to capture this opportunity.
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Cunjun Ma: It can also understand the selling points of the product and help the consultant to quickly answer the user's questions. These tools not only enhance the consultant's production capacity and transform the success rate of customers but also improve the overall performance of the user in terms of accurate recognition requirements, shortening waiting times, etc., in the development of AI large language models for insurance applications. Huize has cumulatively served over 60 million insurance customers today, amassing a wealth of data that encompasses not only our user profiles and plan statistics but also product details and sales information. Leveraging the strength of our dual data pools, coupled with our industry-leading technology and innovation capabilities, we have launched a suite of tools powered by our AI marketing assistant.
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Development of a large language model for insurance application.
Accumulatively served over 16 million insurance customers.
And lastly, a wealth of data that encompasses not only our user profile.
But also product details and sells inflammation locally.
Leveraging the strength of our duo data coupled with our industry, leading technology and innovation capabilities. We have launched a suite of tools powered by our AI marketing assistant this.
Cunjun Ma: These tools include the annuity calculator, an extensive insurance product knowledge bank, and an intelligent chatbot, all of which are widely adopted by our consultants and agents. To provide more color, our annuity calculator is designed to instantly and automatically display annuity payouts upon calculation and clearly illustrate product features, reducing the time it takes for consultants to prepare product proposals and enabling them to quickly address users' inquiries.
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The annuity calculator and extensive insurance product knowledge bank.
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Really illustrate product features reducing the time it takes for consultants to prepare product proposals and enabling them to quickly adjust users in credit.
Cunjun Ma: This AI-driven tool not only improves consultant efficiency, capacity and conversion rate, but also improves the overall user experience by precisely pinpointing user needs and reducing wait time. In the future, Huize will continue to grow well with China and the Asian insurance market. We will enhance the customization capabilities of full-screen and differentiated products, integrate online and offline sales and services, and at the same time, We will continue to expand Hong Kong's insurance market business and actively explore the opportunities for the development of the new market insurance industry in Southeast Asia. ???????????????????????, ??????????????? ??????????????? ??2024?, The goal is to achieve a double-digit income contribution rate in the international market. At the same time, we will continue to invest and develop our own AI models. ?????????????????,?????????????????????????????????? ????????????????????? of the Long-Term Growth Opportunities of the Insurance Industry in China and Asia.
This AI driven tools not only increased consolidated efficiency capacity and conversion rate, but also improve the overall user experience that precisely pinpoint to user name and reducing wait times.
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We will continue to invest in our market share in Hong Kong and actively pursue opportunities in the emerging markets of southeast Asia. Our goal is to identify adjusted both growth market with supportive demographics and replicate our business model for those efforts.
Ronald Tam: We will enhance our ability to customize differentiated products and integrate online and offline product distribution and services in our home market. We will continue to invest in our market expansion in Hong Kong and actively pursue opportunities in the emerging markets of Southeast Asia. Our goal is to identify adjustable growth markets with supportive demographics and replicate our proven business model, further diversify our revenue stream to more markets, and elevate our brand awareness and recognition on the international stage. We're targeting a double-digit percentage revenue contribution from international markets in 2024. At the same time, we have been investing in our own proprietary AI large language model and will strive to integrate our AI product throughout the entire insurance service chain to empower our business operations and ecosystem partners, which includes insurance carriers, independent agents, and distribution channels from the initial insurance product consultation to user engagement, marketing, risk management, customer service, and plan service.,CFO Ron This concludes my prepared remarks for today. I will now turn it all over to our CFO, Mr. Ron Tan, and he will provide an overview of our key financial highlights for the fourth quarter. Thank you, Mr. Ma and Harriet. Good evening everyone in the Asia time zone, and good morning to everyone in New York.
Our revenue streams to more markets and elevate our brand awareness and recognition on the international stage, we're targeting a double digit percentage revenue contribution from international markets in 2024.
At the same time, well be investing in our own proprietary AI launched language model and wealth track to integrate our AI product throughout the entire insurance service chain to empower our business operation and ecosystem partners, which include insurance carriers.
Independent agents and distribution channel from the Asia insurance product competition change user engagement marquee risk management customer service and less of it.
So Jim one Seattle, Ralph gave Shanxi that you do them in a year that's how all.
This concludes my prepared remarks for today I will now turn it over to our CFO, Nick turnaround time, and he will provide an overview of our key financial highlights for the fourth quarter.
Yes.
Yes.
Thank you Mr Mind, Harry Good evening, everyone in the Asia time zone.
Wanting it to everyone in New York.
As the macro economy and industry conditions gradually recover we're very pleased to report that the total DWP facilitated on our platform for the year increased by 18, 2% to RMB five 8 billion in 2023.
We think that this group is largely driven by our omnichannel distribution platform capabilities, our high quality customer base, a diverse range of product offerings as well as our maiden contribution of international revenues from our expansion into the Hong Kong market in the second half of 2023.
Our efforts to acquire new customers new customers have also become increasingly efficient with more than 212000, new customers added to our ecosystem.
Ronald Tam: As the macroeconomy and industry conditions gradually recover, we are very pleased to report that the total GWP facilitated on our platform for the year increased by 18.2 percent to RMB 5.8 billion in 2023. We think that this group is largely driven by our omni-channel distribution platform capabilities, our high quality customer base, our diverse range of product offerings, as well as our maiden contribution of international revenues from our expansion into the Hong Kong market in the second half of 2023. Our efforts to acquire new customers have also become increasingly efficient. With more than 212,000 new customers added to our ecosystem in the fourth quarter, by the end of the year, our total customer count had exceeded 9.3 million. We are proud to announce that we recorded a non-gap net profit of RMB 72.3 million for the 2023 fiscal year, surpassing our previously given guidance of RMB 16 million. Our fourth quarter non-gap net profit of RMB16.4 million also marked our fifth consecutive quarter of profitability.
In the fourth quarter by the end of the year, our total customer count is exceeded $9 3 million.
We are proud to announce that we recorded a non-GAAP net profit of RMB $72 3 million for the 2023 fiscal year.
Surpassing our previously given guidance of RMB 60 million.
Our fourth quarter non-GAAP net profit of RMB 16, 4 million also marked our fifth consecutive quarter of profitability.
Our past financial results are a testament to the effective execution of our key business strategies.
To elaborate first we have consistently prioritize our strategic focus on long term insurance products.
Which have contributed to over 90% of our.
Gross written premiums for the 17th straight quarter.
Secondly, we have continued to empower the capabilities of insurance agents through a superb distribution network product innovation and technological advancements.
This has resulted in significant 73, 4% year over year increase.
In the in premiums generated by our IFA platform, reaching RMB $354 million in 2023.
Thirdly, we continue to pursue upselling opportunities across our high quality customer base in.
In 2023, the repeat purchase ratio for long term insurance products climbed by six nine percentage points.
Ronald Tam: Our best financial results are a testament to the effective execution of our policy, of a Key Business Strategy. To elaborate, first, we have consistently prioritized our strategic focus on long-term insurance products, which have contributed to over 90% of our goals written premiums for the 17th straight quarter. Secondly, we have continued to empower the capabilities of insurance agents through our superb distribution network, product innovation, and technological advancement. This has resulted in a significant 73.4% yield per year increase in premiums generated by our IFA platform, reaching RMB$354 million in 2023. Thirdly, we continue to pursue upselling opportunities across a high-quality customer base. In 2023, the repeat purchase ratio for long-term insurance products climbed by 6.9 percentage points year over year to 36.9%.
Over year to 36, 9%, reflecting the deepening loyalty and trust of our customers.
Our brand and.
And finally, we continue to optimize our operational efficiency and customer acquisition costs as reflected in the further improvement in our gross margin and expenses expense ratio.
As we look at our operational results I want to highlight several key achievements that drove our strong performance.
One a first year premiums that renewal premiums increased by 42% and 4% year over year, respectively, indicating our ability to attract new customers and also engage with existing ones.
Second our persistency rate, our persistency ratio for long term life and health insurance, we made at an industry high level.
As of the end of the year, the 13th at 25th month Persistency ratio stood about minus 5%.
And third the average ticket size for long term savings insurance products, which have become increasingly important as a category for distribution increased by 31% year over year to over RMB 54000 in 2023, demonstrating our continued success in upselling existing.
Ronald Tam: Reflecting the deepening loyalty and trust of a customer in our brand. And finally, we continue to optimize our operational efficiency and customer acquisition costs, as reflected in the further improvement in our growth margin and expense ratio. As we look at our operational results, I want to highlight several key achievements that drove our strong performance. For example, our first-year premiums and renewal premiums increased by 42% and 4% year-over-year, respectively, indicating our ability to attract new customers and also engage with existing ones. Second, our persistency ratio for long-term life and health insurance remains at an industry high level. As of the end of the year, the 13th and 25th month persistency ratio stood at about 95%.
Existing customers.
These highlighted just a few examples of our high quality customer profile and our relentless efforts and successes in capitalizing on the lifetime value potential of our customers.
In 2023, we'd probably sustain our market leading position in long term insurance products in China.
<unk> of our long term health products increased by 19% year over year to approximately RMB 501 billion, while the FY <unk> have a long term life and annuity products search 55% year over year.
RMB, one 7 billion.
We will continue to pursue a balanced product mix between long term health and savings.
Categories to satisfy evolving customer needs and market environment.
We have actively diversified our product portfolio to include also customize P&C insurance products.
Diversification has also paid off as the FY <unk> from this business grew by 74% to approximately RMB $400 million in 2023 per.
Ronald Tam: And third, the average ticket size for long-term savings insurance products, which has become increasingly important as a category for distribution, increased by 31% year-over-year to over RMB54,000 in 2022, demonstrating our continued success in upselling our existing customers. These highlights are just a few examples of a high-quality customer profile and our relentless efforts and successes in capitalizing on the lifetime value potential of our customers. In 2023, we proudly maintain our market-leading position in long-term insurance products in China. The FYP of a long-term health product increased by 19% year-over-year to approximately RMB500 million, while the FYP of a long term life and annuity product surged 55% year over year to RMB 1.7 billion.
Providing us with new and promising revenue stream diversification.
In addition, our expansion into the Hong Kong market yielded encouraging results with total international revenue contribution from Hong Kong, reaching 6% in the fourth quarter.
Throughout the year, we are diligently maintain tight control over our marketing expenses and continued to streamline our operations improve our profit margins and efficiency.
Our gross margin improved to 37, 4% in 2023 from 36, 6% in 2022.
This improvement reflects the enhanced customer acquisition efficiencies and the increased repeat purchases by existing customers in.
In 2023, our total operating expenses continued to decrease falling by 15% year over year.
Our operating expense ratio further improved to 33% in 2023 from 40% a year earlier.
Created by seven percentage points.
We also achieved non-GAAP net margin.
Ronald Tam: We will continue to pursue a balanced product mix between long-term health and savings categories to satisfy evolving customer needs and the market environment. In parallel, we have actively diversified our product portfolio to include also customized P&C insurance products. This diversification has also paid off as the FYP from this business grew by 74% to approximately RMB400 million in 2023, providing us with new and promising revenue streams and specifications. In addition, our expansion into the Hong Kong market yielded encouraging results, with total international revenue contribution from Hong Kong reaching 6% in the fourth quarter. Throughout the year, we have diligently maintained tight control over our marketing expenses and continue to streamline our operations to improve our profit margins and efficiency.
6% for the full year of 2023.
And that's not the end of 2023, our financial position remained strong as our combined balance of cash and cash equivalents stood at RMB 249 million, which is.
$130 million.
In addition, with our commitment to drive shareholder value. We have continued to buy back shares on the open market under our existing mandate.
As of the end of 2023, where we purchased an aggregate of approximately $1 5 million.
Which reiterates management's confidence in our long term business model prospects.
As we continue to solidify our market share in China, we are committed to capitalizing on the long term digitalization opportunities of Asia insurance industry.
Key focus will be to increase our presence in the Hong Kong market, where we play the expanded sales team and launch more customized products to capitalize on the robust MTBE demand and also local insurance demand for high value customers.
We also proactively identify addressable growth markets with supportive demographics in southeast Asia, and largely untapped market potential to replicate our proven business model in China and further diversify our revenue stream to both markets and elevate our brand awareness and recognition of the international markets.
Ronald Tam: Our growth margin improved to 37.4% in 2023 from 36.6% in 2022. This improvement reflects the enhanced customer acquisition efficiencies and the increased repeat purchases by existing customers. In 2023, our total operating expenses continued to decrease, falling by 15% year over year. Our operating expense ratio further improved to 33% in 2023 from 40% a year earlier, decreasing by 7 percentage points.
We have set the target to achieve a double digit revenue contribution from international markets by 2024.
This goal reflects our confidence in our scalability and what the ability of our business model itself.
Moving forward, we'll continue to leverage our deep customer insights and our own proprietary AI products.
Has the product innovation and Upselling capabilities will also further strengthen the integration of our online to offline ecosystem.
Customer acquisition and engagement capabilities of our insurance agents by providing them with the tools and support and increasingly competitive landscape.
Ronald Tam: We also achieved a non-gap net margin of 6% for the full year of 2022. And as of the end of 2023, our financial position remained strong as a combined balance of cash and cash equivalents stood at RMB 249 million, which is more than 30 million US dollars. In addition, with our commitment to drive shareholder value, we've continued to buy back shares from the open market under our existing mandate, and that was at the end of 2023, where we purchased an aggregate of approximately 1.5 million ADS, which reiterates management's confidence in a long-term business model process. As we continue to solidify our market share in China, we are committed to capitalizing on the long-term digitalization opportunities of Asia's insurance industry. Our key focus will be to increase our presence in the Hong Kong market, where we plan to expand the sales team and launch more customized products to capitalize on the robust MCB demand and also local insurance demand for high-value customers. We also proactively identify addressable growth markets with supportive demographics in Southeast Asia and largely untapped market potential to replicate a proven business model in China and further diversify our revenue stream to more markets and elevate our brand awareness and recognition on the international stage. We have set the target to achieve a double-digit revenue contribution from international markets by 2024.
As we recognize the importance of resource allocation across the businesses will maintain a laser sharp focus on driving further improvements in operating efficiency with the aim to enhance the overall profitability.
And in summary, considering a robust AI powered product innovation capabilities, our extensive online to offline distribution ecosystem, the empowerment of our insurance agents and partners.
Proactive overseas expansion efforts, we are continue to be optimistic about the outlook for 2024.
We are now targeting non-GAAP net profit of RMB 60 billion for 'twenty 'twenty four with continued investments in new markets.
NII.
We are confident that our strategies will solidify our position as a leading insurance technology platform in Asia, connecting consumers insurance carriers and distribution partners digitally and efficiently through our data driven the AI powered solutions.
And with that we'll now open up the call to questions. Thank you very much and over to you operator.
Thank you to ask a question you will need to press star one and one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one on one again.
So once again if you do have a question. Please press star one and one on your telephone and wait for your name to be announced based on by while we compile the Q&A roster.
Thank you.
We will now take our first question.
This is from the line of Amy Chen from Citi. Please go ahead.
Oh, Hi, says Hello, and I congratulate management on another profitable quarter and then I have two question. The first question is on the.
Rationalization of compensation paid to the brokerage channel which is called.
<unk> in China, and I'm wondering how will this impact our brokerage income.
In terms of.
For example for annuity products RSA from Ci products, how would this impact our first.
Ronald Tam: And this goal reflects our confidence in the scalability and replicability of our business model itself. Moving forward, we'll continue to leverage our deep customer insights and our own proprietary AI products to enhance our product innovation and upselling capability. We will also further strengthen the integration of our online-to-offline ecosystem to enhance the customer acquisition and engagement capabilities of our insurance agents by providing them with the tools and support in an increasingly competitive landscape. As we recognize the importance of resource allocation across the businesses, we'll maintain a laser-sharp focus on driving further improvement in operating efficiency with the aim of enhancing our overall profitability. And in summary, considering our robust AI-powered product innovation capabilities, our extensive online-to-offline distribution ecosystem, the empowerment of our insurance agents and IFA partners, and our proactive overseas expansion efforts, we continue to be optimistic about the outlook for 2024. We are now targeting a non-gap net profit of RMB60 million in 2024, with continued investments in new markets. MAI
First year commissions.
And the renewal commissions.
And the second question would be on customer demand.
Going into 2024, how has the product mix shift.
So far and what is <unk>.
Most mainstream our most popular products at the moment.
Yes.
Thank you Amy.
So I've got two questions from you the first one on Basel III impact.
On the business.
So we know that this is a very.
Important topic among investors minds right now.
And so far I think that what we've seen.
Which would have happened already for the bancassurance channels is that commission rates have generally been reduced by around 3%.
Up to 50%.
In that in that area.
The brokerage and agency channels of course, the the actual.
Regulations that have not.
Come out officially.
Our effective yet but.
But we do we do expect that this will come probably in the next few months, maybe as early as April.
So what we envisage is that probably there'll be a somewhat similar kind of <unk>.
Operator: We're confident that our strategies will solidify our position as a leading insurance technology platform in Asia, connecting consumers, insurance carriers, and distribution partners digitally and efficiently through our data-driven and AI-powered solution. And with that, we will now open up the call to questions. Thank you very much, and over to you, operator. Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.
The impact on the brokerage and agency channels as we have seen in bancassurance channels in terms of commission rate impacts.
Generally speaking and I think the impact on the offline.
So cost savings products will be more.
Yes.
More.
More ethylene packages.
And versus some of the online only products.
No.
What we see as the potential market impact.
Operator: To withdraw your question, please press star 1 and 1 again. Once again, if you do have a question, please press star 1 and 1 on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. Thank you. We will now take our first question. And this is from the line of Amy Chen from Citi. Please go ahead. Hi, first of all, I want to congratulate management on another profitable quarter, and I have two questions. The first question is about the rationalization of compensation paid to the brokerage channel, which is called Baoxing He Ying.
On that question.
On your second question about customer demand.
And product mix shifts I think we have also continued to see strong and sustained momentum in the long term savings category.
Our annuities. This has still been the most popular are most in demand products.
Among Chinese consumers due to the declining rate environment, and probably the lack of <unk>.
<unk> alternative investment.
Turning to hips in the China market right now with what we've seen in the real estate market and also under provoke underperforming equities market. So the long term savings products offered by insurance companies still represents a very viable and attractive investment product or wealth allocation a product for general Chinese consumer.
Amy Chen: And I'm wondering, how would this impact our brokerage income in terms of, for example, for annuity products or say for CI products, how would this impact our first year commissions and the renewal commission? And the second question would be on customer demand going to 2024. How has the product performed so far, and what is our most mainstream or most popular product at the moment? Thank you. Thank you, Amy.
So we see that for the rest of this year.
As for the first quarter, we are still seeing very strong demand for savings products.
Particular, we have been distributing potash.
Participating long long term savings products.
And we are probably.
Ronald Tam: So I got two questions from you. The first one is on Baoxing Hei's impact on the business. So we know that this is a very important topic among investors' minds right now. And so far, I think that what we've seen, which has happened already for the bank assurance channels, is that commission rates have generally been reduced by around 30% to 50%. In the area of the brokerage and agency channels, of course, the actual regulations have not come out officially or are ineffective yet. But we do expect that this will come probably in the next few months, maybe as early as April.
One of the leading.
Online platforms to distribute hopefully the most popular.
Participating funds went out of the bond market is from Generali, China. So we are probably the one of the leading platform distributing this product.
In the China market. So I think this is probably the this is going to be the mainstream product for the rest of the year and we will continue to work.
Hard to co develop customized products in this category with some of the larger brand names.
Which we hopefully will be able to launch as early as April next month, So we will be looking to cooperate with.
Ronald Tam: So what we envisage is that probably there'll be a somewhat similar kind of impact on the brokerage and agency channels, as we have seen in bank assurance channels in terms of commission rate impact, generally speaking. And I think the impact on the offline, so-called savings products will be more marked, or more, more, more, more, more, more efficiently impacted, versus some of the online only products. So that's what we see as the potential market impact on that question. On your second question about customer demand and product mix shifts, I think we have also continued to see strong and sustained momentum in the long-term savings category and annuities. This has still been the most popular or most in-demand product among Chinese consumers due to the declining rate environment and probably the lack of attractive alternative investment alternatives in the Chinese market right now, with what we've seen in the real estate market and also underperforming equities markets.
One of the top brands in the China market for a customized for each exclusive.
Sure.
Long term participating savings products.
So those will be the answers to your questions Amy.
And that is very clear thank you.
Thank you.
Thank you.
Well now take our next question.
And this is from the line of Coca Gung from Morgan Stanley. Please go ahead.
Okay.
You very much and congratulations on that.
Very good results.
We have one question, that's a little less specific on.
Brian talked a lot about you know about the savings products Tomorrow, and obviously the protection is still on investors mind, although the demand seems to be still kind of weak right now and especially in China.
I wanted to understand so we can see a lot of data on this.
Ronald Tam: So the long-term savings products offered by insurance companies still represent a very viable and attractive investment product or wealth allocation product for the general Chinese consumer. So we see that for the rest of this year and at least for the first quarter, we are still seeing very strong demand for savings products, and in particular, we have been distributing participating long-term savings products, and we are probably one of the leading online platforms to distribute, hopefully, the most popular participating products right now offered by the market, which is mainly from China. So we are probably one of the leading platforms distributing this product in the Chinese market. So I think this is going to be the mainstream product for the rest of the year, and we will continue to work hard to co-develop customized products in this category with some of the larger brand names, which we hopefully will be able to launch as early as April next month. So we will be looking to cooperate with one of the top brands in the Chinese market for a customized, fully exclusive, long-term participation savings product. So those will be the answers to your questions, Amy. And that is very clear.
Do we see a marginal improvement.
Critical illness like the long term health insurance product, specifically are we seeing more customers new customers buying the insurance product.
You're seeing more existing customers buying more coverage.
And do we see any of your potential size from marginal improvement in a specific product.
Product tech thank you.
Alright. Thank you so a question on.
The customers consumers demand on the long term.
Health products, particularly in the critical illness.
The type of products I think we we do see.
Continued or at least from our internal data I mean, obviously the savings category is what people want these days.
Especially in the current backward environment, I think generally a Chinese consumers about relatively stringent budget to allocate.
The money.
Amy Chen: Thank you. Thank you. We'll now take our next question. And this is from the line of Coco Gong from Morgan Stanley. Please go ahead. Thank you very much, and yeah, congratulations on the very good results. I only have one question that's a little bit specific.
Long term savings or along a whole life products, particularly parties participating product these days.
Has drawn a lot of the customers focus and budget.
So I think that this is why we still continue to see a relatively lukewarm.
Growth in the long term health categories for example, critical illness.
Wenwan Gong: Ron talked a lot about, you know, like the savings products, the mine, and obviously, protection is still on investors' minds, although the mine seems to be kind of weak right now, especially in China. So I want to understand, since we can see a lot of data on this, do we see marginal improvement on critical illnesses like the long-term health insurance product? Specifically, are we seeing more customers, new customers, buying this insurance product, or are we just seeing more existing customers buying more coverage? And do we see any other potential signs of marginal improvement in a specific product type? Thank you....
Which has continue to be.
Recovering slowly.
We do see.
Customers existing customers and new customers.
Buying these products through our platform, it's not like the demand is not there it's just that with.
With the relative.
Attention more towards savings products generally in the market and especially.
The function of intermediaries like ourselves.
That sounds like ourselves and our competitors and also generally insurance agents in the overall market mainly pushing.
Ronald Tam: Right, thank you, Coco. So a question on, you know, customers or consumers' demand for long-term health products, particularly the critical illness type of products. I think we, we do see, you know, continued, or at least from our internal data, I mean, obviously, the savings category is what people want these days. And especially in the current macro environment, I think, generally, Chinese consumers have a relatively stringent budget to allocate, you know, their money.
The distribution and sales of savings for US, which has resulted in such a market phenomenon. So we.
What we'll do is we'll continue to innovate on the on the health products. So we mentioned that we have just launched Darwin number eight which is a new version of our <unk>.
Our long term successful brand IP in the critical illness category at this time, we actually are now working with TICC, which Mr. <unk> mentioned earlier in the call. We are working now with large insurers.
Ronald Tam: So long-term savings, or long, whole life products, or particularly participating products these days, have drawn a lot of customers' focus and budget. And so I think that this is why we still continue to see relatively lukewarm growth in the long-term health categories, for example, critical illness, which has continued to be recovering slowly. We do see, you know, customers, existing customers, and new customers buying these products through our platform. It's not like the demand is not there. It's just that the relative attention more towards, you know, savings products, generally in the market, and especially a function of intermediaries like ourselves, platforms like ourselves and our competitors, and also generally insurance agents in the overall market, mainly pushing the distribution and sales of savings products, which has resulted in such a market phenomenon.
These customized products so hopefully.
Create more tension about our customer set and to drive more sales in these categories.
Okay.
Okay.
Thank you very much that's very clear thank you.
Thank you.
Hi.
Well now take our next question.
This is from the line of Hugh you Shang from CLSA. Please go ahead.
Management, congrats on where you'll get it resolved.
From Johnson and I have one question here and my question is for a.
A segment could you give us some more color on how is it going so far and we've noticed that the recently insurance Association of China has asked for.
The street's advice about agents classification, that's all of it.
Is it women I think he may have some effect on business. So kudos shots on morphemes on that thank you.
Alright. Thanks, So we touch on the <unk> business earlier in the opening remarks.
I think this business line has continued to be very strong at least in 2023.
Is contributing almost 20% of our overall.
Premium facilitated.
And we continue to see strong growth in this business line. So.
Ronald Tam: So what we'll do is we'll continue to innovate on health products. So we mentioned that we have just launched our number eight, which is a new version of our long-term successful brand IP in the critical illness category. And this time, we are actually now working with PICC, which Mr. Ma mentioned earlier in the call. We're working now with large insurers on these customized products. So hopefully, you know, we can create more attention among our customer set and drive more sales in these categories. Thank you very much. That's very clear.
Specifically I think that there is a number that I can share here. So yes, so FPP facilitated by the IFA platform, which is the two way platform was 350 million RMB last year, which assuming.
So year over year increase of 73% and I think the most important thing is more and more independent agents or is it now.
Moving to our pipeline as partners because define.
The three things that very very much.
Relative strengths.
Firstly, we have a very extensive product matrix.
Wenwan Gong: Thank you. We'll now take our next question. This is from the line of Yuyu Zhang from CICC. Please go ahead. Insurance Management. Congratulations on your good result. I'm Yuyu Zhang from CLCC, and I have one question here, and my question is for the 2A segment.
From <unk>.
Simple P&C products to the extensive.
Life and health products that we have.
In particular, the customize exclusive products that we co develop with our insurance carriers. So I think that's a big draw to these independent agents, who will become associated with us as a partner.
Yuyu Zhang: Could you give us some more color on how it's going so far? And we've noticed that recently the Insurance Association of China has asked for industry advice about agent classification. If it's in women's, I think you may have some interest in today.
And secondly, I think obviously because of our scale advantage, we earn top commission rates with both of the insurance carriers and thereby.
Ronald Tam: [inaudible] Right, thanks. So we touched on the 2A business earlier in the opening remarks. I think this business line will continue to be very strong, at least in 2023. It's contributing, you know, almost 20% of our overall premium facilitated. And we continue to see strong growth in this business line. So specifically, I think there's a number that I can share here.
These agents by plugging into our platform, we'll be able to enjoy the revenue pickup versus.
It may be putting great another platform or as an agent.
On an agency.
So I guess these are the things that are helping us.
Attracts more and more agents to come and I think finally, and most importantly, we have the whole suite of digital tools that we have been mentioning across opening remarks, which really helps visualize digitalize the customer journey for these agents and also help them manage.
Ronald Tam: So FYP facilitated by the IFA platform, which is the 2A platform, was 350 million RMB last year, which is a year-over-year increase of 73%. And I think the most important thing is that more and more independent agents or IFAs are now coming to our platform as partners because they find the three things that are very much competitive strengths. Firstly, we have a very extensive product matrix, you know, from, you know, simple PNC products to the extensive life and health products that we have, and, in particular, the customized exclusive products that we could develop with insurance carriers. So I think that's a big draw for these independent agents to become associated with us as partners. And secondly, I think, obviously, because of our scale advantage, we earn top commission rates with most of the insurance carriers, and thereby, these agents, by, you know, plugging into our platform, will be able to enjoy the revenue pickup, you know, versus maybe partnering with another platform or as an agent inside an agency.
Customers very efficiently.
If our digital and AI tools and is something that is a quite a unique proposition in the Chinese market at least.
Just to touch upon the IFA business model I think what we're looking to launch is we want to replicate this into the rest of Asia. So I think it will be starting with Hong Kong and also going into other parts of Southeast Asia I think that's something that we think that will be a very.
Good value proposition to those local markets as well.
So yes, I think in short, it's performing very well and they will continue to be it will be increasingly important as a revenue stream of business line for us.
And the second part of the question that we got in the.
Well at least the trends, even though you're right that the Italians in Venezuela.
So the agent qualification exams and the.
The differentiation of different gradings, so what we understand is right nowadays for grades for four agents weight went to grateful.
So four great. One you can sell all the complicated products life and help savings whatnot and grateful you can only sell very simple products like protection.
Ronald Tam: So I guess these are the things that are helping us, you know, attract more and more agents to come. And I think, most importantly, we have the whole suite of the digital tools that we have been mentioning in our opening remarks, which really help digitalize the customer journey for these agents and also help them, you know, manage customers very efficiently with our digital and AI tools. And there's something that I think is quite a unique proposition in the Chinese market, at least. So just to touch upon the IFA business model, I think what we're looking to launch is we want to replicate this in the rest of Asia. So I think we'll be starting with Hong Kong and also going to other parts of Southeast Asia.
<unk>.
What we think that is for most of the.
Agent partners that we have on our business or our Iot platform. Most of these are relatively experienced agents that has been that it needs.
Who have been working in the industry for over five years on average so.
This regulatory impact will be minimal because I think both of these experienced agents have already quantified or can qualify for the highest shares.
The classification and definitely will not have a limiting impact on what they can sell or distribute to the customers.
Ronald Tam: I think that's something that we think would be a very good value proposition to those local markets as well. So yeah, I think in short, it's performing very well, and it will continue to be, it will be increasingly important as a revenue stream and business. And your second part of the question is regarding the Fen Ji Fen Lei, right, the Dalian Fen Ji Fen Lei.
And I think thats the same can be applied to our in house consultants and agents in the case of platform.
And most of our high performing agents can qualify under these new regulations.
And everything that the.
The drop paper has been out but then the effective.
They will likely to be next year.
Thank you.
At this point, we have no further questions I would like to hand, the conference back to Harry for closing remarks.
Ronald Tam: So the agent qualification exams and the differentiation of different gradings. So, what we understand is right now, there are four grades for agents, grade one to grade four. So for grade one, you can sell all the complicated products, life and health savings, and whatnot. And grade four, you only sell very simple products like protection.
Thank you.
So on behalf of John.
We would like to thank you for your participation in today's call and you require further information please feel free to reach out to Europe with the IR team and thank you again for joining US today. This concludes the call.
Ronald Tam: P&C. What we think is for most of the agent partners that we have in our 2A business or on our IFA platform, most of these are relatively experienced agents who have been working in the industry for over five years on average. So this regulatory impact will be minimal because I think most of these experienced agents have already qualified or can qualify for the higher tiers of the classification, and therefore, it will not have a limiting impact on what they can sell or distribute to customers. And I think the same can be applied to our in-house consultants and agents in the Huize platform, and most of our high-performing agents can qualify under these new regulations. And we think that the draft paper has been out, but then the effective date will likely be next. Thank you.
Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect speakers. Please standby.
Sure.
Okay.
<unk>.
Okay.
[music].
Yes.
[music].
Sure.
[music].
Harriet Hu: At this point, we have no further questions, so I would like to hand the conference back to Harriet for closing remarks. On behalf of the Huize Management Team, we would like to thank you for your participation in today's call, and if you require further information, please feel free to reach out to Huize's IRT. And thank you again for joining us today. This concludes the call. Thank you.
Yes.
Yes.
[music].
Hum.
[music].