Q2 2026 China Pacific Insurance (Group) Co Ltd Earnings Call
[Company Representative] (CPIC): Also Mr. Li Jinsong, General Manager of CPIC Life. Our independent directors will also join this event offline and online. First of all, Mr. Zhao Yonggang, our President, will give you introduction of our performance in H1 of this year, to be followed by a Q&A session. Good afternoon, ladies and gentlemen, friends from the investment community and media. It's a great pleasure to meet you. In H1 of this year, in a very complex and fast-changing environment, we've stayed focused on our core business of insurance, seized the opportunity arising from China's demographic change, industrial transformation, and application of AI technologies. On the overall, we delivered a steady improvement in overall operating profit and sustained growth in comprehensive strength. To give you some numbers, our group operating income amounted to CNY 212 billion, up 5.8% year-on-year. Group OPAT reached CNY 21.1 billion, up 6.2%.
Speaker #1: 也是李俊松，General Manager of CPIC Life。 Now, independent directors will also join this event offline, offline. And online. First of all, Mr. president, will give you an introduction of our performance in the first half of this year.
Speaker #1: To be followed by a Q&A session. Good afternoon, ladies and gentlemen, friends from the investment community and media. It's a great pleasure to meet you.
Speaker #1: In the first half of this year, in a very complex and fast-changing environment, we stayed focused on our core business of insurance, seizing opportunities arising from China's demographic changes, industrial transformation, and also the application of AI technologies.
Speaker #1: Under all, all, we delivered in steady improvement in overall operating profit and sustained growth in comprehensive strengths. To give you some numbers, our group operating income amounted to $212 billion, up 5.8% year on year.
Speaker #1: Group OPAT reached $21.1 billion, up 6.2%. Group net profits reached $30.8 billion, up 10.4%. Net assets attributable to parent shareholders stood at $319.2 billion.
Zhao Yonggang: Group net profits reached CNY 30.8 billion, up 10.4%. Net assets attributable to parent shareholders stood at CNY 319.2 billion, up 5.6% from the end of 2025. Our new business value of life business grew 12.7% year-on-year, and the combined ratio of P&C business improved by 1.3 percentage point. Our group AUM surpassed the CNY 4 trillion mark for the first time, and our comprehensive core solvency margin remains well above the regulatory requirements. We have been improving disclosure of operating profit. Following the implementation of the new accounting standards, net profit has become more sensitive to capital market environment, and OPAT presents a clearer view of the company's long-term operating performance. In recent years, our group OPAT maintained a steady growth. In H1 of this year, OPAT from life business was CNY 15.9 billion, up 5.9% year-on-year, while P&C business reached CNY 6.3 billion, up 26% year-on-year.
Speaker #1: Up 5.6% from the end of 2025. Our new business value of life business grew 12.7% year on year. And the combined ratio of P&C business improved by 1.3 percentage points.
Speaker #1: Our group AOM surpassed the $4 trillion mark for the first time, and our comprehensive core solvency margin remained well above the regulatory requirements. We have been improving disclosure of operating profit.
Speaker #1: And following the implementation of the new accounting standards, net profit has become more sensitive to capital market improvement, and OPAT presents a clearer view of the company's long-term operating performance.
Speaker #1: In recent years, our group, OPAT, maintained steady growth. In the first half of this year, OPAT from life business was $15.9 billion, up 5.9% year on year, while P&C business reached $3.63 billion, up 26% year on year.
Speaker #1: On the issue of contractual service margin, well, CSM is a key financial indicator. It reflects the sustainability of the future profits. Our CSM has continued to grow since 2023, reaching $368.8 billion at the end of the first half of first half of this year, up 3.3% from the end of 2025.
Zhao Yonggang: On this issue of contractual service margin, CSM is a key financial indicator. It reflects the sustainability of the future profits. Our CSM has continued to grow since 2023, reaching CNY 368.8 billion at the end of H1 of this year, up 3.3% from the end of 2025. By the end of June this year, our group net assets stood at CNY 319 billion, up 5.6% year-on-year. This is achieved on the back of a steady profit contribution and a solid foundation in asset liability matching. We also have a solid capital position. At the end of June this year, the comprehensive and the core solvency margin ratios were well above the regulatory requirements. We are committed to shareholder returns with a clearly defined medium and long-term dividend policy based on operating profit.
Speaker #1: By the end of June this year, our group net assets stood at $319 billion, up 5.6% year on year. This was achieved on the back of a steady profit contribution and a solid foundation in net asset-liability matching.
Speaker #1: We also have a solid capital position. At the end of June this year, the comprehensive and the core solvency margin ratios were well above the regulatory requirements.
Speaker #1: We committed we are committed to shareholder returns, with a clearly defined medium and long-term dividend policy based on dividend policy based on operating profit.
Speaker #1: Since 2007, we have distributed a total of RMB 130 billion in cash dividends to our shareholders. For the first half of this year, we optimized the dividend distribution arrangement and implemented an interim dividend for the first time, with an interim DPS of RMB 0.42.
Zhao Yonggang: Since 2007, we have distributed a total of CNY 130 billion in cash dividends to the shareholders. For H1 of this year, we optimized the dividend distribution arrangement and implemented an interim dividend for the first time with an interim DPS of CNY 0.42 and a total interim dividend amount of CNY 4.04 billion, further enhancing investors' experience. Next, I'll talk about the performance of our life business, P&C business, and asset management business. For the life business, we remain committed to value growth and focused on regular premium business. We saw steady improvement in business quality and operational efficiency. To be specific, the total written premium reached CNY 190 billion, down 1.6% year-on-year. Regular FYP amounted to CNY 30.7 billion, up 28%. The 13 months and the 25 months persistency ratio were 96.8% and 94.8% respectively.
Speaker #1: And a total interim dividend amount of $4.04 billion, further enhancing investors' experience. Next, I'll talk about the performance of our Life business, P&C business, and also Asset Management business.
Speaker #1: For the life business, we remain committed to value growth and focused on regular premium business. We saw steady improvement in business quality and operational efficiency.
Speaker #1: To be specific, the written premium reached $190 billion, up or down 1.6% year on year. Regular FYP amounted to $30.7 billion, up 28%.
Speaker #1: And the 13-month and 25-month persistency ratios were 96.8% and 94.8%, respectively. In terms of MBV, for the first half of this year, it grew 12.7% to RMB 10.8 billion.
Zhao Yonggang: In terms of new business, our MBV for the H1 of this year grew 12.7% to CNY 10.8 billion. This was mainly driven by the agency channel. In terms of MBV margin, it improved by 2.5 percentage points year on year to 17.5%. On the agency channel, we strengthened the systematic capacity building, which includes conducting customer engagement under multiple scenarios and driving the upward shift in the customer mix. We also provide the differentiated insurance and service solutions, and also try to build an agency sales force of professional, career-based, digital-savvy younger agents. To be specific, our monthly average agent headcount was 183,000, and our FYP per core agent and the monthly average FYC per agent both achieved double-digit growth. Our AI Plus strategy also played a positive role in supporting our agents. For example, we launched the Xiao Lan AI agent to empower our sales agents.
Speaker #1: This was mainly driven by the agency channel. In terms of MBV margin, it improved by 2.5 percentage points year on year to 17.5%.
Speaker #1: On the agency channel, we strengthened systematic capacity building, which includes conducting customer engagement on multiple scenarios and driving an upward shift in the customer mix. We also provide differentiated insurance and service solutions, and are working to build an agency sales force of professional, career-based, digitally savvy, younger agents.
Speaker #1: To be specific, our monthly average agent headcount was 183,000. Both our FYP per core agent and the monthly average FYC per agent achieved double-digit growth.
Speaker #1: Our AI Plus strategy also played a positive role in supporting our agents. For example, we launched a Xiaolan AI agent to empower our sales agents.
Speaker #1: Actually, the average number of agents using Xiaolan who use Xiaolan frequently saw increases in the FYP per agent, FYC per agent, active ratio, and the average number of long-term policies.
Zhao Yonggang: Actually, the average number of agents using Xiao Lan was nearly 90,000, and those who use Xiao Lan frequently saw increases in the FYP per agent, FYC per agent, active ratio, and the average number of long-term policies. These indicators have all improved by double digits. For the bancassurance business, we strictly implemented regulatory requirement for consistency between filed and actual expenses. We also adhere to the value-oriented strategy. To be specific, our regular FYP growth from bank channel picked up quarter by quarter. The number of active bank outlets measured by RP business was nearly 5,000, up 4.9%. The average regular premium per active bank outlet reached nearly CNY 300,000. We also have a Jianxiang Jia, health management program for bank channel customers. Actually, the number of requests from Jianxiang Jia by mid-tier customers was above 10,000 in the H1 of this year.
Speaker #1: Now, these indicators have all improved by double digits. For the bancassurance business, we strictly implemented regulatory requirements to ensure consistency between filed and actual expenses.
Speaker #1: Also, we adhere to the value-oriented strategy. To be specific, our FYP—regular FYP growth from the bank channel—picked up quarter by quarter. Now, the number of active bank outlets, measured by RP business, was nearly 5,000, up 4.9%.
Speaker #1: And the average regular premium per active bank outlet reached nearly $300,000. We also have the Jianxiang Jia health management program for bank channel customers.
Speaker #1: Actually, the number of requests from Jianxiang Jia by mid-tier customers was above 10,000 in the first half of this year. Pacific Care Home is also a brand for premium retirement communities.
Zhao Yonggang: CPIC Home is also a brand for premium retirement community. It also helped to maintain customer relation from the bank channel, and nearly 30% of the total FYPs are generated by using this platform. The share of mid-tier customers and above increased by 5.6 percentage points to 34.2%. The agency channel focused on mid-tier and high-net-wealth customers. In terms of product strategy, we continue to advance investment innovation in variable products. For example, the return premium for par business reached CNY 65 billion, up 76% year on year. The participating business as a share of total FYPs rose to 55.5%, which was up by more than 160% year on year. In terms of the strategy on the P&C side, we continue to support the national strategies. In the H1 of this year, we achieved a steady premium growth, on top of optimization of business mix.
Speaker #1: It also helped to maintain customer relations from the bank channel, and nearly 30% of total FYPs are generated by using this platform. The share of mid-tier customers and above increased by 6.65 percentage points to 34.2%.
Speaker #1: And the agency channel focused on mid-tier and high-net-worth customers. In terms of product strategy, we continue to advance investment innovation in variable products.
Speaker #1: For example, the written premium for par business reached ¥65 billion, up 76% year on year. The participating business, as a share of total FYPs, rose to 55.5%, which was up by more than 160% year on year.
Speaker #1: In terms of the strategy, on the P&C side, we continue to support national strategies. In the first half of this year, we achieved steady premium growth on top of optimization of business mix.
Speaker #1: To be specific, its direct written premium reached $114 billion, up by 1.4% year-on-year. The premium growth for the second quarter was 3.6%, much better than in the first quarter.
Zhao Yonggang: To be specific, its direct return premium reached CNY 114 billion, up by 1.4% year on year. The premium growth for the Q2 was 3.6%, much better than the Q1. In terms of the auto insurance, because of the decline in new car sales in China, our DWPs from auto insurance was CNY 53 billion, up by 0.2% year on year. Non-auto DWPs was CNY 60.6 billion, up by 2.5% year on year. We continue to focus on quality and profitability to strengthen underwriting discipline and expense management. In the H1 of this year, the combined ratio of P&C was 95%, down by 1.3 percentage points. Of which, the loss ratio was 68.7%, down by 0.8 percentage points. The underwriting expense ratio was 26.3%, down by 0.5 percentage points. You can see our underwriting profits grew by 35.7% year on year.
Speaker #1: In terms of auto insurance, because of the decline in new car sales in China, our DWPs from auto insurance were RMB 53 billion, up by 0.2% year on year.
Speaker #1: Non-auto DWPs were 60.6 billion, up by 2.5% year-on-year. We continue to focus on quality and profitability to strengthen underwriting discipline and expense management.
Speaker #1: In the first half of this year, the combined ratio of P&C was 95%, down by 1.3 percentage points. Of this, the loss ratio was 60.87%, down by 0.8 percentage points.
Speaker #1: And the underwriting expense ratio was 26.3%, down by 0.5 percentage points. So you can see our underwriting profits grew by 35.7% year-on-year. In terms of our capacity building, we continue to make efforts in this regard.
Zhao Yonggang: In terms of our capacity building, we will continue to make efforts in this regard. As we mentioned, the underwriting combined ratio of auto insurance was 94.6%, down by 0.7 PTs, and the expense ratio improved by 0.7%. We continue to improve precise management, so that our auto insurance renewal rate was 79.2%, 2 percentage points better year on year. We also continue to accelerate the development of new energy vehicle business. Its growth in the H1 of this year was 20.9%, and its total share, it was 23.9%, up by 0.1 percentage points year on year. In terms of business mix, we continue to improve business mix and advanced the risk reduction system. For non-auto insurance, the combined ratio was 95.3%, improving by 2.3 percentage points. The top 4 non-auto business lines produced underwriting profitability. Health insurance and the liability insurance maintained a healthy growth.
Speaker #1: As we mentioned, the underwriting combined ratio of auto insurance was 94.6%, down by 0.7 percentage points. The expense ratio improved by 0.7 percentage points. We continue to improve precise management so that our auto insurance renewal rate was 79.2%, 2 percentage points better year on year.
Speaker #1: We also continue to accelerate the development of our new energy vehicle business. Its growth in the first half of this year was 20.9%, and its total share was 23.9%, up by 0.1 percentage points year on year.
Speaker #1: In terms of business mix, we continue to improve our business mix and advance the risk reduction system. For non-auto insurance, the combined ratio was 95.3%, improving by 2.3 percentage points.
Speaker #1: And the top four non-auto business lines produced underwriting profitability. Health insurance and liability insurance maintained healthy growth. To be specific, health insurance recorded $17.1 billion in DWPs.
Zhao Yonggang: To be specific, health insurance recorded CNY 17.1 billion in DWPs, up 10.4%, and the liability insurance recorded CNY 13.7 billion in DWPs, up by 6.6% year on year. The underwriting combined ratio improved by 0.4 percentage points year on year. In terms of asset management, we continue to adhere to the principle of value, long-term, prudent, and responsible investment, and strictly followed ALM requirements to improve our SAA. We continue to refine our dumbbell-shaped asset allocation strategy. By the end of June this year, our AUM maintained a steady growth, and surpassing CNY 4 trillion for the first time. Our investment asset grew by 4.4%, and the AUM grew by 6.3%. Of this, the share of equity assets was 17.1%, up by 0.4 percentage points. The core equity investment was 13.9%, down by 0.5 percentage points.
Speaker #1: Up 10.4%. And liability insurance recorded 13.7 billion in DWPs, up by 6.6% year on year. The underwriting combined ratio improved by 0.4 percentage points year on year.
Speaker #1: In terms of asset management, we continue to adhere to the principle of valuing long-term prudent and responsible investment, strictly following ALM requirements to improve our SAA, and we continue to refine our dumbbell-shaped asset allocation strategy.
Speaker #1: By the end of June this year, our AUM maintained steady growth and surpassed 4 trillion yuan for the first time. Our investment assets grew by 4.4%.
Speaker #1: And AUM grew by 6.3%. Of this, equity assets improved by 7%, and the share of equity assets was 17.1%, up by 0.4 percentage points.
Speaker #1: And the core equity investment was 13.9%, down by 0.5 percentage points. The debt financial assets stood at 71.4%, down by 1 percentage point.
Zhao Yonggang: The debt financial assets stood at 71.4%, down by 1 percentage point. We continue to explore opportunities in alternative instruments such as REITs and ABS. We continue to explore a new model for diversified asset and liability matching, centering on net investment yield plus. We continue to track the matching of liability costs and asset return across multiple levels based on life numbers, maturity investment yield on the new fixed income investment covered guaranteed interest rate on new policies. The 3-year average net investment yield covered the guaranteed interest rate, and the 3-year average comprehensive investment yield covered the cost of the liabilities, which help us to maintain a reasonable safety margin in ALM. We also continue to optimize fixed-income asset portfolios and increase allocation to long-term government bond. Now the average asset duration of our fixed-income investment reached 11.7 years.
Speaker #1: We continue to explore opportunities in alternative instruments such as risk and ABS, and we continue to explore a new model for diversified asset and liability matching.
Speaker #1: Centering on net investment yield plus, we continue to track the matching of liability costs and asset return across multiple levels. Based on life numbers, the maturity investment yield on new fixed income investments covered the guaranteed interest rate on new policies.
Speaker #1: The three-year average net investment yield covered the guaranteed interest rate, and the three-year average comprehensive investment yield covered the cost of liabilities, which helps us to maintain a reasonable safety margin in ALM.
Speaker #1: We also continue to optimize fixed income asset portfolios and increase allocation to long-term government bonds. Now, the average asset duration of our fixed income investment has reached 11.7 years.
Speaker #1: In the first half of this year, we observed a structural divergence in the capital market, and the long-term risk-free interest rate remained at low levels.
Zhao Yonggang: In the H1 of this year, we see a structural divergence for the capital market, and the long-term risk-free interest rates stayed at low levels. We proactively seized structural investment opportunities and also maintained a margin of safety to manage the downward trends in a volatile market. The net total and the comprehensive investment yields were 1.5%, 2.4%, and 1.8% respectively. The market price of our dividend value equity portfolio experienced significant fluctuations, which led to a short-term pressure on our comprehensive investment yield. But in the long run, we can navigate market cycles and maintain competitive comprehensive investment yields. In terms of credit risk management, our enterprise bond holdings and the financial bond holdings issued by non-government-sponsored banks maintained high debt and issuer credit ratings. Investments in non-public financing instruments as a share of total investment further declined.
Speaker #1: We proactively seized structural investment opportunities and also maintained a margin of safety to manage the downward trend in a volatile market. The net total and the comprehensive investment yields were 1.5%, 2.4%, and 1.8%, respectively.
Speaker #1: The market price of our dividend value equity portfolio experienced significant fluctuations, which led to short-term pressure on our comprehensive investment yield. However, in the long run, we can navigate market cycles and maintain a competitive comprehensive investment yield.
Speaker #1: In terms of credit risk management, our enterprise bond holdings and the financial bond holdings issued by non-government-sponsored banks maintained high debt and issuer credit ratings.
Speaker #1: Investments in non-public financing instruments as a share of total investment further declined. Well, those are the numbers and the performance of our core business lines.
Zhao Yonggang: Well, that is the numbers and performance of our core business lines. To sum up, I would say the international market is quite complex and challenging. On the domestic side, China is also restructuring its economy. The government is also trying to improve safety, social safety net, and the people's livelihood, which will create more opportunity for the insurance industry. We will strive toward this vision of a top-tier insurance service conglomerate with market leadership, international competitiveness, and overall strength, and continue to create value for shareholders, customers, employees, and society. We are going to further improve the quality and the productivity of the agency channel, sharpen the competitiveness of a regular premium business of bank channel.
Speaker #1: To sum up, I would say the international market is quite complex and challenging. On the domestic side, China is also restructuring its economy.
Speaker #1: The government is also trying to improve the social safety net and people's livelihood, which will create more opportunities for the insurance industry. We will strive toward this vision of a top-tier insurance service conglomerate with market leadership, international competitiveness, and overall strength.
Speaker #1: And continue to create value for shareholders, customers, employees, and society. We are going to further improve the quality and productivity of the agency channel, sharpen the competitiveness of the regular premium business in the bank channel, and, in terms of the PNC business, we will put profitability first.
[Company Representative] (CPIC): In terms of P&C business, we will put profitability first, continue to strengthen business quality control, improve catastrophe response mechanisms, and improve risk reduction so as to have sustainable growth. In terms of risk management and asset management, we will uphold long-term thinking, persist in ALM, and seize investment opportunity to generate steady sustainable investment return. That concludes my presentation. Thank you. Well, thank you, Mr. Zhao, for your detailed presentation. Now we will open the floor to questions. You can also ask questions over the telephone, and also online. Please ask no more than two questions. First of all, we will have some questions on site.
Speaker #1: Continue to strengthen business quality control, improve catastrophe response mechanisms, and enhance risk reduction, so as to achieve sustainable growth. In terms of risk management and asset management, we will uphold long-term thinking, persist in ALM, and seize investment opportunities to generate steady, sustainable investment returns.
Speaker #1: That concludes my presentation. Thank you. Well, thank you, Mr. Zhao, for your detailed presentation. Now, we will open the floor to questions. You can also ask questions over the telephone and online.
Speaker #1: Please ask no more than two questions. First of all, we'll have some questions on site. Thank you for the opportunity. I'm from Guotai Haitong Securities, Liu Xinqi.
Liu Xinqi: Thank you.
Liu Xinqi: Thank you for the opportunity. I am from Guotai Junan Securities, Liu Xinqi. First of all, congratulations on your steady performance. I have two questions on the liability side. First of all, about the new requirement from the regulators. What is your MBV outlook? Because for H1 of this year, your MBV achieved double-digit growth. What about July onwards? With Document 65 from the regulators, we saw some pressures on the market in terms of premium growth. So what is your MBV outlook for H2 of this year and thus also for next year? Second question, regarding payment liability structure. A lot of the insurance pay a lot attention to the growth of par life. Your share on par life business is already 55%.
Speaker #1: First of all, congratulations on your steady performance. I have two questions on the liability side. First, regarding the new requirements from the regulators.
Speaker #1: Now, what's your MBV outlook? Because as you can see, for the first half of this year, your MBV—I mean, MBV—achieved double-digit growth.
Speaker #1: But what about July onwards? With Document 55 from the regulators, we saw some pressures on the market in terms of premium growth.
Speaker #1: So what is your MBV outlook for the second half of this year, and also for next year? Second question: regarding payment, liability structure.
Speaker #1: Now, a lot of the insurers pay a lot of attention to the growth of, well, par life. Now, your share of par business is already 55%.
Speaker #1: We believe, given the low interest rate, the two higher share of a par life is not necessarily a good thing. Because, in terms of, well, sometimes you should utilize traditional insurance to secure low liability cost.
Li Jinsong: We believe given the low interest rates, the too higher share of par life is not necessarily a good thing. Because in terms of, sometimes you should utilize traditional insurance to secure low liability cost. So what is your plan for your participating business? Now, because if the customer prefers participant life, how are you going to allocate and maintain the balance between par and the traditional business? Well, thank you for your question and your attention. Now, first of all, regarding your question on MBV. I believe, first of all, if we look at the H1 numbers, Mr. Zhao has given you a lot of numbers in the first 6 months. I believe CPIC, our Q2 business was better than Q1. I believe CPIC is quite unique in this regard.
Speaker #1: So what is your plan for your participating business? Because if the customer prefers participating life, are you going to how are going to allocate and maintain the balance between par and the balance and the traditional business?
Speaker #1: Well, thank you for your question and your attention. Now, first of all, regarding your question on MBV, now I believe first of all, if we look at the first half of numbers, Mr. Zhao has given you a lot of numbers.
Speaker #1: In the first six months, I believe CPIC did well. Our second quarter business was better than the first quarter. I believe CPIC is quite unique in this regard.
Speaker #1: Now, if we look at the first half of this year, I believe we're going to pursue MBV growth from several areas. First of all, we will continue to improve customer segmentation.
Li Jinsong: Now, if we look at the H1 of this year, I believe we're going to pursue MBV growth from several areas. First of all, continue to improve customer segmentation. Secondly, improve product mix, product structure. For example, by promoting protection type of business. For example, this kind of long-term care products. Well, these products grew very popular on the market. On the other hand, we also improved the share of our participating insurance. And also we focus on developing our team. First of all, our back office managers. For example, the building and developing of these managers. Also on the front line, our agency team also is improving. For example, by becoming more professional, by becoming more digitally savvy, younger, et cetera. So our agency team is also improving.
Speaker #1: Secondly, improve product mix and product structure. For example, by promoting protection-type business, such as long-term care products. These products have grown very popular in the market.
Speaker #1: On the other hand, we also improved the share of our participating insurance. And we are also focused on developing our teams. First of all, our, well, I mean, back office managers.
Speaker #1: For example, the building and development of these managers. And also, on the front line, our agency team is also improving. For example, by becoming more professional, by becoming more digitally savvy, younger, etc.
Speaker #1: So our agency team is also improving. If we look at the bank channel, we are always improving and building this kind of high-quality bank channel team.
Li Jinsong: If you look at the bank channel, we are always improving, building this kind of a high-quality bank channel team so that we can have more opportunity for the bank business development. We also improve our refine the development, refine the management. We focus on value growth, and we focus on efficiency. Also we promoted this kind of AI or digital empowerment. For example, the AI Plus strategy is a key priority project for CPIC. CPIC Life is actively promoting our AI digital strategy. For example, by improving our processes and procedures, and in terms of claims, settlement, underwriting. We are also adopting AI tools, improving the AI empowerment so that we can achieve further growth in value. Also we've strengthened our risk management and compliance management.
Speaker #1: So that we can have more opportunities for the bank business development. We are also improving our refined development—refined management. We focus on value growth.
Speaker #1: We focus on efficiency, and we also promoted this kind of AI or digital empowerment. For example, the AI Plus strategy—it's a key priority project.
Speaker #1: For CPIC, CPIC Life is actively promoting our AI digital strategy. For example, we are improving our processes and procedures. In terms of claims, settlement, and underwriting, we are also adopting AI tools and enhancing AI empowerment.
Speaker #1: So that we can achieve further growth in value, and also with Jensen, our risk management and compliance management. So, all these factors made it possible for us to grow for the two quarters of the first half of this year.
Li Jinsong: All these factors made it possible for us to grow for the 2 quarters of the H1 of this year. But of course, there are regulatory trends, regulatory changes. There are pressures for next year, for the H2 of this year. This is an issue for the whole industry. But on the whole, we are quite optimistic about our business perspective outlook. Now, first of all, in terms of the timing, if we look at the last 3 years, you see MBV grew quite fast for us. These are all double-digit growth for the last 3 years. So we believe we are sustainable in terms of the timing, in terms of the pace of business, and also in terms of our strategies. We are quite balanced in terms of meeting customer needs and keeping up the seasonality or business pace.
Speaker #1: But of course, there are regulatory trends and regulatory changes. There are pressures for next year and for the second half of this year. This is an issue for the whole industry.
Speaker #1: But on the whole, we are quite optimistic about our business outlook. Now, first of all, in terms of timing, if we look at the last three years, you can see MBV grew quite fast for us.
Speaker #1: These are all double-digit growth numbers for the last three years. So, we believe we are sustainable in terms of timing, as well as in terms of the pace of business.
Speaker #1: Also, in terms of our strategies, we are quite balanced in terms of meeting customer needs and keeping up with seasonality or the business pace.
Speaker #1: And if we look at our team, we have currently—we focus too. We still have room for improvement in this kind of PO1 cities in terms of bank channel.
Li Jinsong: If we look at our team, currently, we still have room for improvement in these kind of tier 1 cities. In terms of bank channel, we focus more on tier 1 city rather than, well, tier 3, tier 4 smaller cities. Bank channel strategy is different from the agency business. So they complement each other, I mean, the two channels. In terms of the growth model, we on the one hand promote agency and the bank channel, and we also now are developing our work site marketing. I believe based on all these, although we have a quite high baseline, we are still optimistic. Secondly, in terms of the liability for CPIC Life, we actually set or anchor our liability cost based on our product. For example, we are promoting participating insurance since the H2 of last year, and we saw very good results.
Speaker #1: We focus more on Tier 1 cities rather than, well, Tier 3, Tier 4, smaller cities. So the bank channel strategy is different from the agency business.
Speaker #1: So they complement each other, I mean the two channels. And in terms of the growth model, we, on the one hand, promote agency and the bank channel.
Speaker #1: And we are also now developing our worksite marketing. So I believe that based on all these factors, although we have quite a high baseline, we are still optimistic.
Speaker #1: And secondly, in terms of the liability for CPIC Life, we actually set or anchor our liability cost based on our products. For example, we have been promoting participating insurance since the second half of last year.
Speaker #1: And we saw very good results. Going forward, how are we going to approach this? I believe, as a big insurance company, first of all, we need to meet customer needs.
Li Jinsong: Going forward, how are we going to approach this? I believe as a big insurance company, first of all, we need to meet customer needs, and on top of that, we need to improve our liabilities. In the H2 of this year, in terms of our product strategy for the agency channel, since we will have more higher-end customers, we are going to promote whole life participating products and whole life incremental life. For the H2 of the year, we are going to meet the different needs from different customer segments. While focusing on participating life, we are going to also balance it with traditional life. For example, also long-term care products will be launched. On one hand, long-term care products will be combined with participating annuity. We are going to launch this kind of government tax-sponsored long-term care products.
Speaker #1: And on top of that, we need to improve our liabilities. So in the second half of this year, in terms of our product strategy for the agency channel, since we'll have more higher-end customers, we are going to promote whole life participating products and whole life incremental life.
Speaker #1: And so, for the second half of the year, we are going to meet the different needs of different customer segments. While focusing on participating life, we are also going to balance it with traditional life.
Speaker #1: For example, long-term care products will also be launched. On the one hand, long-term care products will be combined with participating annuity. And we are going to launch this kind of government tax-sponsored long-term care product.
Speaker #1: And to better serve our customers, we are going to promote CPIC medical insurance. Working together—I mean, CPIC Life and CPIC Health working together—to promote the CPIC Blue health insurance products.
Li Jinsong: To better serve our customers, we are going to promote CPIC medical insurance working together. I mean, CPIC Life and CPIC Health working together to promote the CPIC Blue health insurance products to be sold via the agency channel. For the bank channel, we are going to focus on value, focus on high-end customers participating whole life incremental products, and also participating annuity products, so as to reduce our liability costs and better serve our customers. Thank you. Now, let's welcome the next question. Thank you. I'm from Xun Ting. I'm from Dongwu Securities. First of all, congratulations on your solid performance. Both on the life side and the P&C side, you improved your combined ratio by 1.3 PTs. I have two questions. Number 1, as Mr. Zhao mentioned, gave us a lot of numbers on your performance.
Speaker #1: To be sold via the agency channel. For the bank channel, we are going to focus on value, focus on high-end customers, and participate in whole life incremental products.
Speaker #1: And also participating annuity products, so as to reduce our liability costs and better serve our customers. Thank you. Now, let's welcome the next question.
Speaker #1: Thank you. I'm Xuan Ting from Dongwu Securities. First of all, congratulations on your solid performance. Both on the life side and the PNC side, you improved your combined ratio by 1.3 percentage points.
Speaker #1: I have two questions. Number one, as Mr. Zhao mentioned, you gave us a lot of numbers on your performance. We're happy to see a lot of good numbers.
Xun Ting: We're happy to see a lot of good numbers, but we would still like to see what's your view on your performance so far this year. Also going forward, for the industry as a whole, what are the changes? How are you going to respond to these changes? For the whole year, what's your annual targets? What's your view on the annual targets? Second question about the new regulatory rules. Actually, on page 20 of your slides, we don't see specific numbers on page 20. In terms of the new regulatory KPIs, how are you coping? What's your calculation on these new indicators? How are you going to do in terms of the asset side and the liability side? Well, maybe I will answer your first question. Thank you for your attention.
Speaker #1: But we’d still like to hear your view on your performance so far this year. And also, looking forward, for the industry as a whole, what are the changes and how are you going to respond to these changes?
Speaker #1: And for the whole year, what are your annual targets? What's your view on the annual targets? Second question, about the new regulatory rules. Actually, on page 20 of your slides, we don't see specific numbers.
Speaker #1: Now, in terms of the new regulatory KPIs, how are you coping? What's your calculation on these new indicators? And what are—how are you going to do in terms of the SS side and the liability side?
Speaker #1: Well, maybe I'll answer your first question. Thank you for your attention. Now, I would say in the first half of this year, we continued to seek progress while maintaining stability.
Zhao Yonggang: Now, I would say in H1 of this year, we continued to seek progress while maintaining stability. Guided by the 15th Five-Year Plan, we are actually delivering quite a stable improvement in our key KPIs. Our overall strength has also improved, especially given this kind of complicated environment. I believe we have demonstrated a lot of resilience. Now, if you want me to comment on the performance so far, I would say we can see four features. Number one, our core business is stable. Secondly, we are seeing new momentum. Thirdly, we see better synergy, and fourthly, we see better technology empowerment. Now, for our core insurance business, we continue to focus on quality growth. As we mentioned, our life business, our regular premium growth was very good, up by 28% year-on-year. MBV margin also grew quite stably.
Speaker #1: And guided by the 15th-year plan, we are actually delivering quite stable improvement in our key KPIs. Our overall strength has also improved. Especially given this kind of complicated environment, I believe we have demonstrated a lot of resilience.
Speaker #1: Now, if you want me to comment on the performance so far, I would say we can see four features. Number one, our core business is stable.
Speaker #1: Secondly, we are seeing new we are seeing new momentum and thirdly, we see better synergy and fourthly, we see better technology empowerment. Now, for our core insurance business, we continue to focus on quality growth.
Speaker #1: As we mentioned, our life business—our regular premium growth was very good, up by 28% year-on-year. MBV and MBV margin also grew quite steadily.
Speaker #1: And behind that, we would see this product mix and our customer mix also improve. Now, for the P&C business, our combined ratio improved—one of our best levels in recent years.
Zhao Yonggang: Behind that, we would see this product mix and our customer mix also improved. Now, for the P&C business, our combined ratio improved, one of our best levels in recent years, now standing at 95%. We also see a new energy vehicle also give us quite a steady growth in terms of asset management business. Now, we are sticking to our long-term investment strategy. We focus a lot on SAA. We remain disciplined and remain resolute on our SAA, and paid a lot of attention to our ALM. So our investment performance was quite stable. Secondly, as we mentioned, we saw this kind of new growth momentum, new areas of growth. For example, we are actively promoting technology insurance, green insurance, and actually, the premium income from technology insurance grew nearly 18% year-on-year.
Speaker #1: Now, standing at 95.95%. We also see new energy vehicles giving us quite steady growth in terms of the asset management business. Now, we are sticking to our long-term investment strategy.
Speaker #1: We focus a lot on SAA. We remain disciplined and remain resolute in our SAA, and have paid a lot of attention to our ALM.
Speaker #1: So our investment performance was quite stable. Now, secondly, as we mentioned, we saw this kind of new growth momentum—new areas of growth.
Speaker #1: Now, for example, we are actively promoting technology insurance and green insurance. Actually, the premium income from technology insurance grew nearly 18% year-on-year.
Speaker #1: And we also saw a lot of progress in terms of serving the new production force, and our green insurance premium reached nearly 40 billion yuan.
Zhao Yonggang: We also saw a lot of progress in terms of serving the new production force. Our green insurance premium reached nearly CNY 40 billion. In terms of the health insurance, we are also developing our presence, expanding our presence. Our commercial health insurance new premium grew by double digits. Also, we saw double digits for the coverage of government-mandated long-term care insurance. Our AUM in the first and the second pillar of pension schemes exceeded CNY 1 trillion. So that's the second point. Thirdly, better coordination and synergy. That is to say, to better develop this kind of cross-selling and synergy and coordination, we focus more on the customer orientation. For example, coordination between life and the P&C subsidiary, and also integration of products and services, and the asset and liability coordination.
Speaker #1: In terms of health insurance, we are also developing our presence, expanding our presence. Our commercial health insurance new premium grew by double digits.
Speaker #1: And also, we saw double-digit growth for the coverage of government-mandated long-term care insurance. And our AUM in the first and second pillars of pension schemes exceeded ¥1 trillion.
Speaker #1: So that's the second point . And thirdly , better coordination . And synergy . That is to say , to better develop this kind of cross-selling and synergy and coordination We focus more on the customer orientation .
Speaker #1: For example, coordination between Life and the PNC subsidiary, and also integration of products and services, as well as asset and liability coordination. So, this kind of synergy and coordination helped to generate a lot of good results. And of course, we also cultivated our strategic customers. We integrated our insurance service and investment size.
Zhao Yonggang: So this kind of synergy and coordination helped to generate a lot of good results. Of course, we also cultivated our strategic customers. We integrated our insurance, service, and investment sides, and we developed a series of strategic customers and major projects. You can see the number of multi-policy customers and the rate of cross-selling both rose steadily. Fourthly, we strengthened technology empowerment to boost the quality and efficiency of our core business. For example, we are actively promoting AI Plus strategy to put in place our vertical domain large models. We are happy to see the rollout of some of the key projects. For example, as I mentioned, for the life business, we launched the Xiao Lan agent, AI agent for our life agents. We also launched projects to help P&C business to better manage its claims.
Speaker #1: And we developed a series of strategic customers and major projects And you can see the number of multi customers and the rate of cross-selling , both rose steadily And fourthly , we strengthen the technology empowerment to boost the quality and the efficiency of our core business .
Speaker #1: For example , we are actively promoting AI plus strategy and to well put in place our vertical domain , large models . And we are happy to see the rollout of some of the key projects .
Speaker #1: For example , as I mentioned , for the life business , we launched the the Xiao Lan agent , AI agent for our sales agent for our life agents , and we also launched a project to help PNC business to better manage its claims And also , we paid a lot of attention to data security .
Speaker #1: We are the first in China to pass the Data Security Capacity Maturity Model (DSM-M) Level Four certification. So, I would say if we look at the first half of this year, I believe these four points stood out.
Zhao Yonggang: We also paid a lot of attention to data security. We are the first in China to pass the Data Security Capability Maturity Model, DSCM level 4 certification. I would say if we look at the H1 of this year, I believe these four points stood out. Of course, the industry is developing quite fast with a complicated backdrop. CPIC has maintained a stable growth. We are serving the real economy and the people's wellbeing. Given this, we do see some opportunities. For example, for life business, we believe our life products has become a very important tool for people, for household wealth allocation. For example, variable insurance sold very well, and this also improved the company's liability cost. For auto insurance, new energy vehicle insurance supported our premium growth.
Speaker #1: But of course , the industry is developing quite fast . With a complicated background pack job . CPIC has maintained a stable growth .
Speaker #1: We are serving the real economy and the people's well-being . And given this , we do see some opportunities for example , for life , business .
Speaker #1: We believe our life products has become a very important tool for people for for household wealth allocation . For example , variable variable insurance Sold very well .
Speaker #1: And this also improved the company's liability cost. Now for auto insurance. Well, new energy vehicle insurance supported our premium growth.
Speaker #1: And this development of a new productive force, and the green transition, reinforced our role as an economic shock absorber and social stabilizer.
Zhao Yonggang: This development of a new productive force and the green transition reinforced our role as an economic shock absorber and social stabilizer. On the investment side, structural divergence in the equity market increased volatility. It will have a notable impact on our profits. On the regulatory front, tight supervision continued. Well, it is guiding the industry towards long-term, healthy, and high-quality development. For the H2 of this year, CPIC will continue to pursue high-quality growth. We need to focus on three areas. Number 1, we need to serve China's 15th Five-Year Plan and seize new opportunities. For example, we need to align ourselves with the government's big strategies and also the development of the industries. For example, the technology innovation, green development, and shipping safety, et cetera.
Speaker #1: On the investment side , structural divergence in the equity market increased volatility . It will have a notable impact on our profits . On the regulatory front , tight supervision continued .
Speaker #1: Well , it is guiding the industry towards long term healthy and high quality development For the first for the second half of this year and CPIC will continue to pursue high quality growth .
Speaker #1: We need to focus on three areas. Number one, we need to serve China's 15th Five-Year Plan and seize new opportunities. For example, we need to align ourselves with the government's big strategies and also the development of the industries.
Speaker #1: For example , the technology innovation , green development and shipping safety , etc. On the other hand , we also need to focus on areas .
Zhao Yonggang: On the other hand, we also need to focus on areas, for example, health and elderly care for the key population groups, so that we can uncover opportunities in new fields and new models. Secondly, we need to focus on improving the quality and the efficiency of our insurance business. For the life side, we need to coordinate product and the channel strategy, accelerate breakthrough in key areas, and improve customer segmentation to drive sustained value growth, and also improve high-quality sales force and diversify profit sources. For the P&C business, we need to consolidate our business base and seize opportunities in key areas.
Speaker #1: For example, health and elderly care for key population groups, so that we can uncover opportunities in new fields and new models.
Speaker #1: Secondly , we need to focus on improving the quality and the efficiency of our business . Insurance business for the life business , for the life side , we need to coordinate product and channel strategy , accelerate the breakthrough in key areas , and improve customer segmentation to drive sustainable , sustained value growth and also improve high , high quality sales force and diversify profile sources .
Speaker #1: Profit sources for the PNC business . We need to consolidate our business base and seize opportunities in key areas for example , this kind of a new areas and on the investment side , we need to improve long term mechanism for asset liability coordination and better respond to , for example , regulatory rules , new rules strengthen our investment research , diversify asset allocation strategy so as to deliver stable and sustainable returns .
Zhao Yonggang: For example, these kind of new areas. On the investment side, we need to improve long-term mechanism for asset liability coordination and better respond to, for example, regulatory rules, new rules, strengthen our investment research, diversify asset allocation strategy so as to deliver stable and sustainable returns. Thirdly, we should also advance our three core strategies or priorities and build core competitiveness. For example, our big healthcare strategy. We need to improve product innovation and the model optimization. In terms of internationalization strategy, we should focus on improving overseas capability and strengthen our Hong Kong operations. For the AI Plus strategy, we should accelerate the R&D and large-scale deployment of high-value AI applications. This can speed up digital intelligence transformation and also help to empower our business. To sum up, I would say we should remain committed to these principles.
Speaker #1: And thirdly, we should also advance our three core strategies or priorities, and build core competitiveness. For example, regarding our big healthcare strategy, we need to improve product innovation and optimize the model in terms of our internationalization strategy.
Speaker #1: We should focus on improving overseas capability and strengthening our Hong Kong operations for the AI Plus strategy. We should accelerate the R&D and large-scale deployment of high-value AI applications. This is a new sea. This can speed up digital intelligence transformation and also help to empower our business.
Speaker #1: To sum up , I would say we should remain committed to these principles . We should pursue higher quality , better resilience , and more solid foundation and more breakthroughs for our business so as to better meet our annual targets .
[Company Representative] (CPIC): We should pursue higher quality, better resilience, more solid foundation, and more breakthroughs for our business so as to better meet our annual targets. Thank you. Thank you. I will answer your second question, and maybe I will just add a little bit. The new rules on asset liability for insurance business received a lot of attention. I would say, well, it will have a very profound impact on insurance business, asset allocation, asset management. This new regulatory document is like a combination of previous rules. It is now very comprehensive. I would say we should focus on four areas, because first of all, it focuses on the governance of insurance companies. Secondly, it enhances the quantitative indicators. Thirdly, it broadens the evaluation horizon. Actually, before the document officially released, we have been making preparations for the forthcoming rules. For example, we studied the preliminary documents.
Speaker #1: Thank you, thank you. I'll answer your second question, and maybe I will just add a little bit. Now, the new rules on AI asset liability for insurance business received a lot of attention.
Speaker #1: I would say . Well , it will have a very profound impact on insurance business as an allocation asset management . Now this new regulatory document is a It's it's like a combination of previous rules It's now very comprehensive Now , I would say we should focus on four areas because first of all , you focus on the governance of insurance companies .
Speaker #1: Secondly , it enhances the quality . Quantitative indicators . And thirdly , it broadened the evaluation horizon . Now , actually , before the document officially released , we have been actually making preparations for the forthcoming rules for example , we we study the pre preliminary documents .
Speaker #1: We have been a participant of relevant seminars and the studies for the industry . And we are also trying to revise relevant data reporting mechanism so as to meet the new requirements Now , given this kind of a regulatory indicators and monitoring indicators , I would say life and the PNC , we are doing both are doing quite well .
[Company Representative] (CPIC): We have been a participant of relevant seminars and the studies for the industry. We are also trying to revise relevant data reporting mechanism so as to meet the new requirements. Given this kind of regulatory indicators and monitoring indicators, I would say life and P&C, both are doing quite well. For example, for P&C traditional account, our coverage ratio was 115%, and for life business, the interest rate hedging ratio is more than 80%. Other indicators, we also scored quite well. If we look at these indicators, if you want to see the future performance of CPIC, you can look at the stress testing. You can look at the metrics parameters. For example, during the stress testing equity asset reduction, we are for 1 year to 3 years. I believe that is a tall order.
Speaker #1: For example , for PNC traditional account , our coverage ratio was 115% . And for life business , the interest rate hedging rate ratio is more than 80% .
Speaker #1: And other indicators . We also scored quite well . So if we look at these indicators , if you want to see the future performance of CPIC , you can look at the stress testing .
Speaker #1: You can look at the metrics parameters, for example, during the stress testing, equity asset reduction—we are talking about one year to three years. I believe that that is a tall order, but for CPIC, our SA strategy is already aligned with regulatory requirements.
[Company Representative] (CPIC): For CPIC, our SAA strategy is already aligned with regulatory requirements. I believe these indicators will be more under control going forward, especially for the life business. On the liability side, you can see it is very diversified. On the asset side, China's interest rate is going downwards. We have long been discussing or studying this. For example, we have come up with a net investment yield plus strategy. Because the life business has very long liabilities, very long fixed liabilities, so we need to take a holistic approach. We need to consider a lot of factors so that we can come up with a more refined, more consolidated tools, platforms, so as to better coordinate assets and liability matching. We believe we should start from the product. We should anchor against the liability and drive asset allocation on top of that.
Speaker #1: So, I believe these indicators will be more under control going forward, especially for the life business. For the liability side, you can see it's very diversified, and also, on the other side, China's interest rate is going downwards.
Speaker #1: So we have long been discussing or studying this No , for example , we have come up with a net investment yield plus strategy now because the life business has very long liability Very long fixed liabilities .
Speaker #1: So we need to take a holistic approach. We need to consider a lot of factors so that we can come up with more refined, more consolidated tools and platforms so as to better coordinate asset and liability matching.
Speaker #1: We believe we should start from the product. We should anchor against the liability and drive asset allocation on top of that.
Speaker #1: So for SA , we need to be prudent . We need to be resolute . We need to have a diversification . And differentiation for TAA .
[Company Representative] (CPIC): For SAA, we need to be prudent, we need to be resolute. We need to have diversification and differentiation. For TAA, we need to be more dynamic so as to cope with the rapid changes of the market. We need to be disciplined. We need to be controllable so that the long-term investment yield can better cover our liability costs. In terms of fixed income, we will remain more timely to seize very fast these allocation opportunities so that our interest bond can give us good results. We will also look at the opportunities, these kind of new emerging opportunities, alternative opportunities. We need to consider the valuation and the market structure so as to adjust our allocations, so that we can improve our long-term returns, and also improve our multiple manager approach.
Speaker #1: We need to be more dynamic so as to cope with the rapid changes of the market. We need to be disciplined. We need to be controllable.
Speaker #1: So that the long-term investment yield can be better. To cover our liability costs in terms of fixed income, we will remain more timely to see very fast.
Speaker #1: This allocation of opportunities means that our interest bond can give us good results. And we'll also look at opportunities. For these kinds of new emerging opportunities and alternative opportunities, we need to consider the valuation and market structure.
Speaker #1: So as to adjust our allocations so that we can improve our long term return , and also improve our multiple manager approach . Of course , we will further improve in alternative investment in terms of equity investment and other kind of alternative investment And the whole based on the new arm requirements , we are going to improve our internal structure , internal organization with with adjusted KPIs , evaluation mechanism , etc.
[Company Representative] (CPIC): Of course, we will further improve alternative investment in terms of equity investment and other kinds of alternative investment. On the whole, based on the new ALM requirements, we are going to improve our internal structure, internal organization with adjusted KPIs, evaluation mechanism, et cetera, so that we can meet new regulatory rules. Thank you. Let's welcome the next question. Thank you. I am Dennis Yi from Securities Daily. Now, for the first time, you have interim dividend. So what are the factors you considered and what is the overall yearly outlook? Do you have any future plans? Thank you. As you see this year, we optimized the structure of the dividend payout and launched for the first time the interim dividend. We want to make it long-term so that we can improve the cash return for our investors and improve their experience.
Speaker #1: . So that we can meet new new regulatory rules Thank you . Let's welcome the next question Thank you Then shall ye . From securities newspaper No , you have for the first time you have interim dividend .
Speaker #1: So what are the factors you considered and what's the overall yearly outlook . And do you have any future plans Thank you Now , as you see this year , we the structure of dividend payout and launched for the first time .
Speaker #1: The interim dividend—we want to make it long term so that we can further improve the cash return for our investors and enhance their experience. Now, the interim dividend is a very important part of our annual dividend payout. We anchor it against OPAT and also consider the solvency ratio, as well as the needs of investors, to decide the ratio between the interim dividend and the year-end dividend, for example.
[Company Representative] (CPIC): Interim dividend is a very important part of our annual dividend payout. We anchor against OPAT and also consider this kind of solvency ratio and also the needs of investors so as to decide a ratio between interim dividend and year-end dividend. For example, this time we are going to pay out CNY 0.42 per share. So if we calculate by OPAT, the ratio is 19%. This ratio is comparable against peers. If we calculate by net profit, then the dividend rate is 13.1%. This number is higher than most of our peers. Regarding the total year dividend, first of all, our long-term and midterm dividend payout policy is quite stable. That is to say, we look at our OPAT, we look at our solvency, we look at our business. Secondly, life CSM and spread, and the P&C profitability are key factors for our dividend payout.
Speaker #1: This time, we are going to pay out ¥0.42 per share. So if we calculate by OPAT, the ratio is 19%. Now, this ratio is comparable against peers.
Speaker #1: But if we calculate by net profit then the dividend rate is 13.1% . Now this number is higher than most of peers . Regarding the total year dividend First of all , our long term and mid term dividend payout policy is quite stable .
Speaker #1: That is to say , we look at our opat , we look at our solvency . We look at our Our business Secondly , now life CSM and spread and PNC profitability are key factors for our dividend payout .
Speaker #1: I believe these factors will continue to grow steadily going forward. So, I believe we pay a lot of attention to returns to customers and to investors.
Dennis Yi: I believe these factors will continue to grow stably going forward. So I believe we pay a lot of attention to return to investors. We are confident we can deliver stable, long-term, foreseeable return to our investors. Thank you. Well, let's continue the questions. Thank you for the opportunity. I am Gary Xiang from Zhonghai Securities. Now, two questions. Number 1, on the issue of aging. Some other insurance companies are making inroads into elderly care products. So what are your efforts in the retirement elderly care area? Second question. On the financial numbers, we can see your income tax is going down for the Q1. This is particularly evident for the life business. So could you tell me something about the reason for a reduction in income tax? Well, thank you for your question.
Speaker #1: We are confident we can deliver a stable , long term foreseeable return to our investors . Thank you Well , let's continue the questions Well , thank you for the opportunity .
Speaker #1: I'm going Shang from Zhonghai Securities . Now , two questions . Number one on the issue of aging and some other insurance companies are making inroads into elderly care products .
Speaker #1: So what's your efforts in the retirement elderly care area ? And second question on finance , on the financial numbers . We can see tax your income tax is going down for the first quarter Now this is a evident for the life business .
Speaker #1: So could you tell me something about the reason for reduction in income tax Well thank you for your question . Now to answer your first question regarding the population aging and our response , as you mentioned , as China's population ages No .
Gary Xiang: To answer your first question regarding the population aging and our response, as you mentioned, as China's population ages, China is also promoting a health strategy, and the people in China are having more and more higher requirements for retirement and elderly care services. These present us with more opportunities. For CPIC, I would say we are quite consistent in our big health strategy. For example, more than five years ago, we launched the big health strategy, and now we upgraded it to the big health and wellness strategy. We are actually making it one of our top three strategies. In terms of the targets for this strategy, I would say we need to build an integrated health and wellness ecosystem, strengthen the synergy between insurance, investment, and wellness service, and promote joint growth scenario integration, and vary co-creation.
Speaker #1: China is also promoting a health strategy. And the people in China are having higher and higher requirements for retirement and retirement.
Speaker #1: And elderly care . Services . Now , these present us with more opportunities for CPIC . I would say we We are quite consistent in our big health strategy for example , five years ago , we have .
Speaker #1: More than five years ago, we launched the Big Health strategy, and now we have upgraded it to the Big Health and Wellness strategy. We are actually making it one of our top three strategies. In terms of the targets for this strategy, I would say we need to build an integrated health and wellness ecosystem and strengthen the synergy between insurance and investment.
Speaker #1: And wellness, and wellness service, and promote joint growth scenario integration and the vertical creation. So this is the key target for our health and wellness strategy. If we look at the first half of this year, I would say we have made some progress in line with our expectation.
[Company Representative] (CPIC): This is the key target for our health and wellness strategy. If we look at the H1 of this year, I would say we have made some progress in line with our expectation. We continue to enhance top-level design, coordinated management, and talent management at each level. For example, we have trained our people, we have built relevant mechanisms. I would say our health and wellness strategy has saw very good results, and it has brought very positive impact on our insurance business. I would say we have made three big moves. Number one, in terms of promoting the coordination between health insurance and pension business. For example, we accelerated product innovation and iteration for health insurance. Our premium for commercial health insurance policy grew by 16% year-on-year. The number of people covered by government-mandated long-term care insurance increased greatly.
Speaker #1: We continue to enhance top level design , coordinated management and the talent management at each level We , for example , we have trained our people .
Speaker #1: We have built relevant mechanisms. I would say our health and wellness strategy has shown very good results, and also, it has brought a very positive impact on our insurance business.
Speaker #1: I would say we have made three big strides. Number one, in terms of promoting the coordination between health insurance and pension business.
Speaker #1: For example, we accelerated product innovation and iteration for health insurance. Our premium for commercial health insurance policies grew by 16% year on year.
Speaker #1: The number of people covered by government-mandated long-term care insurance increased greatly. We also seized the opportunities from new health insurance regulations and are developing products such as individual account medical insurance and participating health insurance.
[Company Representative] (CPIC): We also seized opportunities from new health insurance regulations and are developing products such as individual account medical insurance, and participating health insurance. In terms of pension business, we made arrangements across the three pillars of pension, with a focus on enhancing pension investment returns. For example, the cumulative returns of Changjiang Pension's single fixed income portfolios, single equity-linked portfolios, and collective fixed-income portfolios have all ranked among the top in the market. We are happy to see that the AUM for the second quarter, for the second pillar, enterprise annuity surpassed CNY 1 trillion for the first time. The second breakthrough was in terms of elderly care and rehabilitation. For example, our CPIC Home, that is our premium retirement community. Now we have 14 of them in operation. We have more than 3,500 long-term residents, and nearly 350 of those residents are suffering from dementia.
Speaker #1: In terms of the pension business, we made arrangements across the three pillars of pension, with a focus on enhancing pension investment returns.
Speaker #1: For example, the cumulative returns of Changjiang Pension's single fixed income portfolios, single equity-linked portfolios, and collective fixed income portfolios have all ranked among the top in the market.
Speaker #1: And also, we are happy to see that the assets under management for the second quarter, for the second pillar, enterprise annuity, surpassed ¥1 trillion for the first time.
Speaker #1: The second breakthrough is was in terms of elderly care and rehabilitation . For example , our CPIC home , our that is our premium retirement community .
Speaker #1: Now we have 14 of them in operation. We have more than 3,500 long-term residents and more than 350 of them.
Speaker #1: Of those, residents are suffering from dementia. We are also actually making progress in terms of light asset projects. We also have this kind of a—.
[Company Representative] (CPIC): We are actually making progress in terms of light asset projects. We also have this kind of a Bai Shui Ju program. By leveraging this Bai Shui Ju program, we can have smart service devices for data collection and management. To date, it has served over 100,000 customers. We also have built a direct billing medical network across China, which now covered 1,210 medical vendors. This covered 83 of the top 100 hospitals on the Fudan China Hospital list. The Guangxi CPIC International Hospital Alliance has now grown to 158 member institutions. The third breakthrough is for the integration between insurance and the service to boost the business and wellness ecosystem. CPIC Life leveraged the elderly care community to enhance high net worth customer development.
Speaker #1: By three . Program . By leveraging this by 3G program We we have . We can have a smart service devices for data collection and management to date , it has served over 100,000 customers .
Speaker #1: We also have built a direct billing medical network across China , which now covered 1210 vendor medical vendors and this covered 83 of the top 100 hospitals under Fudan China Hospital list and the Guangzhou CPIC International Hospital Alliance has now grown to 158 member institutions , and the third breakthrough is for the integration between insurance and the service to boost the business and wellness ecosystem .
Speaker #1: CPIC life leverage the elderly , care community to enhance high net worth customer development for example , for the first half of this year , the number of high net wealth life insurance customers driven by the retirement program increased by 37% year on year for the PNC side by utilizing the wellness ecosystem by the wellness ecosystem , strengths , our CPIC PNC improved auto insurance claim service It helped to improve customer experience and also reduced the average claims payout for CPIC health .
[Company Representative] (CPIC): For example, for the H1 of this year, the number of high net worth life insurance customers driven by the retirement program increased by 37% year-on-year. For the P&C side, by utilizing the wellness ecosystem strength, our CPIC P&C improved the auto insurance claims service. It helped to improve customer experience and also reduced the average claims payout. For CPIC Health, we utilize the Yi Pei Tong, that is a one-stop medical treatment claims solution. To date, the Yi Pei Tong has served more than 750 enterprises and 610,000 users. Now, I would say for the H1 of this year, we have improved the quality of our health and wellness strategy. We can see this also empowered our business. In the H2 of this year, we need to deepen the integration.
Speaker #1: We utilize the E Peyton that is a one stop medical treatment claim solution . To date , the epic has served more than 750 enterprises and 610,000 users Now , I would for the first half of this year , we have improved the quality of our health and wellness strategy and also we can see this also empowered our business .
Speaker #1: In the second half of this year . We need to deepen the integration . We need to implement our three top projects . Strategies to deepen the integration of health and wellness service so as to better enable two way empowerment between services and the core business , so as to better serve our business and also our customers Thank you Now , let me continue to answer your question on the income tax .
[Company Representative] (CPIC): We need to implement our three top project strategies to deepen the integration of health and wellness service so as to better enable two-way empowerment between services and the core business, so as to better serve our business and also our customers. Thank you. Now, let me continue to answer your question on the income tax. Now, of course, yes, our income tax actually declined. This is mainly because of a decline in life business. Two reasons for that. Number one, is in previous years, for the life business, it remained prudent in terms of accounting judgment. So because of that, actually, it does not record deferred income reduction. But now the government has confirmed that we should adopt the new standards, so that using the new standards, actually, we can claim full confirmation for deferred income tax.
Speaker #1: Now, of course, yes, our income tax actually declined. This is mainly because of a decline in life business. There are two reasons for that.
Speaker #1: Number one is, in previous years for the life business, it remained prudent in terms of accounting judgment. So because of that, actually, this does not record deferred income reduction.
Speaker #1: But now the government made has confirmed that we should adopt the new standards . So that using the new standards , actually , we can claim Full confirmation for deferred income , deferred income , income tax .
Speaker #1: So going forward , well , on the other hand , the government of the company is making investment into government bonds , long term bonds .
[Company Representative] (CPIC): Going forward, on the other hand, the company is making investment into government bonds, long-term bonds. So these also add to tax deductibles. Thank you. Thank you. Let's welcome the next question over the phone. If you want to ask questions via the telephone, please press star 1 to queue, and then ask the question. After confirmation, please identify yourself and your employer before you ask questions. Please ask no more than 2 questions. Now we have a question from Mr. Zhou Chen from Credit Suisse. Well, thank you. And from UBS. Now, thank you and congratulations on your good performance. Number one question is about the investment. Now we see the market is quite divergent for the H1, and you demonstrated resilience. Now, could you tell me something about the market?
Speaker #1: So these also add to tax deductibles. Thank you, thank you. Let's welcome the next question over the phone.
Speaker #2: Have one .
Speaker #1: If you want to ask questions via the telephone, please press star one to queue, and then ask your question after confirmation.
Speaker #1: Please identify yourself and your employer before you ask questions . Please ask no more than two questions . Now we have someone from from we have a question from Mr. Zhou Chen from Credit Suisse Well , thank you I'm from UBS Now thank you .
Speaker #1: And congratulations on your good performance. Number one question is about the investment. Now we see the market is quite divergent for the first half.
Speaker #1: And you you you demonstrated the resilience . Now could you tell me something about the market . I mean for example the third quarter or so far , third quarter , what's your investment performance ?
Zhou Chen: I mean, for example, the Q3 or so far, so Q3, what's your investment performance? And what about this kind of high dividend stocks and growth shares? So what's your view on that, for example, this kind of growth shares, tech, technology shares, for example? Second question, your actual numbers were better than expected in terms of growth. For example, OPAT. Now, could you tell me something about, previously you have been surpassing your guidance. Now, OPAT, could you tell me more about the OPAT, for example, by life, by P&C, and what's your overview or what's your outview for OPAT? Now, maybe let me answer your questions. And you asked actually quite a lot of questions. Now, of course, you'll see investment yield is a very important topic for us because it will impact on our net profit.
Speaker #1: And what about this kind of high dividend stocks and growth shares . So what's your view on that for example , this kind of a growth shares tech technology shares for example Second question .
Speaker #1: You see you your your your actual numbers were better than expected in terms of growth for example , Opat Now , could you tell me something about I mean , previously you have been surpassing your guideline guide guidance .
Speaker #1: Now Opat Could you tell me more about the Opat for example , by life , by PNC and what's your overview ? What's your view for Opat ?
Speaker #1: Now maybe let me answer your questions and you asked actually quite a lot of questions No , of course you see , investment yield is a very important topic for , for , for us because it will impact on our net Now CPIC pays a lot of attention to our investment yield Now , for the first half of this year , our investment yield , maybe I'll give you some background .
[Company Representative] (CPIC): CPIC pays a lot of attention to our investment yield. Now, for the H1 of this year, our investment yield. Maybe I'll give you some background. Now, we look at the net total and the comprehensive investment yields. And for the net yield, I would say is within our expectation. It was down by 0.2 PTs. Now, it was because of a lot of factors. It's not unexpected. For example, maturing of previously high-yielding assets, et cetera. But we manage reinvestment. We have a TAA so that to counterset, offset this kind of impact. If we look at the absolute number, 1.5, non-annualized return, it's actually quite the best among our listed peers. Total investment yield grew a little bit, mainly thanks to TAA contribution. For example, in the trading spread for stocks and also for funds. And TPL assets also made some contributions.
Speaker #1: Now we look at net total and comprehensive investment yields. And for the net yield, I would say it is within our expectation. It was down by 0.2 points. Now, it was because of a lot of factors.
Speaker #1: It is a is not unexpected because for example maturing of a previously high yielding assets , etc. but we manage reinvestment . We have a tar so that to counter set offset this kind of impact If we look at the absolute number 1.5 non annualized return is it's actually quite is the best among our listed peers .
Speaker #1: Total investment yield grew a little bit , mainly thanks to to a contribution . For example . And the spread the trading spread for stocks and also for funds and the TVL also made some TPL assets .
Speaker #1: We also made some contributions. But of course, our comprehensive investment yield faced a lot of pressure compared to our peers. I would say it's more like a real-life stress test, especially for Q2.
[Company Representative] (CPIC): But of course, our comprehensive investment yield faced a lot of pressure compared to our peers. I would say it is more like a real-life stress testing, especially for Q2, the stock market was quite divergent. For example, the China stock index actually was down by 14%. That is a very big reduction. Also, our core equity strategy faced a lot of adverse influence in a lot of dimensions. For example, our underlying equity is different from the K-shaped divergence, and our A plus H share strategy is also producing active effect. Certainly, we are quite active in terms of managing equity, where we have more in equity and less on mutual funds. So this is also divergent from the market trends in H1 of this year. Fourthly, we are quite prudent in pursuing our investment portfolio.
Speaker #1: The stock market was quite divergent . For example , the China Stock Index actually down was down by 14% . That's a very big reduction And also our core equity strategy Well faced a lot of adverse influence in a lot of dimension .
Speaker #1: For example, our underlying equity is different from the K-type divergence, and our A plus H share strategy is also producing a negative effect.
Speaker #1: Thirdly, we are quite active in terms of managing equity. We have more in equity and less in funds, mutual funds.
Speaker #1: So, this is also divergent from the market trend in the first half of this year. And fourthly, we are quite prudent in pursuing our investment portfolio. If we look at the numbers for the life business, our core solvency actually ranked number two among listed peers.
[Company Representative] (CPIC): If we look at the numbers for life business, our core solvency actually ranked number 2 among listed peers. So given these dimensions, these factors, our core equity strategy faced a lot of stress. But we believe this is a temporary thing. It is a transitional thing. It is not for the long term. For the net and the total and the comprehensive investment yield, if we look at the net, I believe in the short term, you cannot be best in all of them. Currently, we focus first of all on net investment yield, and also pay attention to total and the comprehensive yield. So we believe sometimes it is inevitable that we might have a lagging comprehensive investment yield. Now, the peers have different pictures in terms of investment yields because of a lot of reasons. For example, their business, their solvency, their dividend payout strategy, et cetera.
Speaker #1: So given this factors , these dimensions , these factors , our core equity strategy faced a lot of strategy , a lot of stress .
Speaker #1: But we believe this is a temporary thing. It's a transitional thing. It's not for the long term, for the net and the total and the comprehensive investment yield.
Speaker #1: If we look at the names , I believe in the short term , you cannot be best in , in , in , in all of them .
Speaker #1: Currently, we focus first of all on net investment yield and also pay attention to total and comprehensive yield. So, we believe sometimes it's inevitable that we might have a lagging comprehensive investment yield. Now, as the peers have different pictures in terms of investment yields, because of a lot of reasons.
Speaker #1: For example , their business , their solvency , their dividend payout strategy , etc. . So if we only look at short term , if we just compare numbers in the short term , we don't believe it is is comprehensive enough .
[Company Representative] (CPIC): If we only look at short term, if we just compare numbers in the short term, we do not believe it is comprehensive enough, it is adequate, it is meaningful. Now for CPIC, we are mature. We are patient funding. So we should stick to our principle. We should remain prudent and resolute. Maybe it is a slow bull market, a long bull market. We need to be flexible and disciplined. We should seize upon the kind of phase opportunity on the market, seize upon this kind of opportunity generated by market transition.
Speaker #1: It is adequate . It's it's meaningful . Now for CPIC , we are mature . We are patient , patient , patient , patient funding .
Speaker #1: So we should stick to our principle. We should remain prudent and resolute. Maybe it's a slow bull market, a long bull market.
Speaker #1: We need to be flexible and disciplined. We should seize upon these kinds of Faisal opportunities on the market. Size pond is kind of an opportunity generated by market transition.
Speaker #1: So for our CPIC, we now pursue a multiple asset managers strategy. Now, I believe this kind of multiple manager approach is quite unique in the market.
[Company Representative] (CPIC): For our CPIC, we now pursue multiple asset managers strategy. Now, I believe this kind of a multiple manager approach is quite unique on the market, so that our long-term performance can be more predictable and stable. I believe the resilience of our strategy is under pressure, of course, this time. Of course, we do see some drawbacks, for example, a lack of elasticity for our current strategy in this kind of a K-shaped divergence. So that going forward, we can be more flexible. We can tap into the strength of our internal investment managers and external asset managers. Of course, we all know that starting from July, the market also went through some changes, especially the rotation of the styles for equity. Now, there will be a rebalance between growth and value shares. For H-share market, rebounded is good for us.
Speaker #1: So that our long term performance can be more predictable and stable . I believe the resilience , well , the resilience of our strategy is under pressure .
Speaker #1: Of course , this time Of course , we we do see some drawbacks . For example , a lack of elasticity for our current strategy in this kind of a k type divergence .
Speaker #1: So that, going forward, we can be more flexible. We can tap into the strengths of our internal investment managers and external asset managers.
Speaker #1: Of course , we all know that starting from July , the market also went through some changes , especially the rotation of the styles for equity Now there will be a rebalance between growth and value shares for each share market .
Speaker #1: Rebounded . It's good for us and for mutual fund . The herding of mutual fund . The effect of the herding of mutual fund is diminishing , I believe Q2 is the negative impact of Q2 is also reducing .
[Company Representative] (CPIC): For mutual fund, the herding of mutual fund, the effect of the herding of mutual fund is diminishing. I believe the negative impact of Q2 is also reducing. I believe these are quite good news for CPIC. First of all, as I mentioned, we care most about net investment yield, but that is not to say we neglect or ignore comprehensive or total investment yield. Regarding the whole year investment yield, we believe A-share market will become more balanced, and earning-driven opportunities will be the mainstay. For H-share, we believe this H-share market will still focus more on high dividend payout shares. All these developments will be beneficial to CPIC. We are going to look at the timing opportunities. We are going to improve to better select this kind of growth opportunities under a satellite strategy.
Speaker #1: So I believe these are quite good news for CPIC . First of all , we know we are . As I mentioned , we care most about net investment yield , but that's not to say we neglect or ignore comprehensive or total investment yield Regarding the whole year investment yield , we believe Asia market will become more balanced and earnings driven opportunities will be the main mainstay And for each share , we believe is H market will still focus more on high dividend payout shares Now all these evolvement will be beneficial to CPIC .
Speaker #1: We are going to look at the well timing opportunities by going to improve To better select this kind of growth opportunities under its satellite strategy , we are confident we can beat the indicators , beat the benchmarks so as to boost the total investment yield and comprehensive investment yield .
[Company Representative] (CPIC): We are confident we can beat the indicators, beat the benchmarks, so as to boost the total investment yield and comprehensive investment yield. I believe that is our outlook and comment on our investment yields. As you mentioned, the issue about the profit, could you repeat your question about the profit? Could you repeat that? On OPAT. For OPAT, the drivers of OPAT is CSM amortization as a key source, and also spread, and also P&C's underwriting profitability. For the H1 of this year, for life, CSM improved by more than 4% year on year, and spread is still going up, and the P&C underwriting profitability also improved by 1.4%. If we look at them more in details, for life, including Hong Kong, OPAT CNY 15.8 billion. For P&C OPAT, CNY 6.2 billion. If we look at the yearly picture, CSM amortization will continue to grow steadily.
Speaker #1: Well , I believe that is our outlook . And the comment on our investment yields , as you mentioned , the issue about the profit , maybe I will .
Speaker #1: Also could you repeat your question about the profit . Could you repeat that Well , Opat now for Opat . Now the drivers of Opat is a CSM amortization as a key source and also spread and also MNCs underwriting profitability .
Speaker #1: Now , for the first half of this year for life , CSM improved by more than 4% year on year and spread is still going up , and the PNC profitability underwriting profitability also improved by 1.4% .
Speaker #1: So if we look at it in more detail for Life, including Hong Kong OPAT, it was 15.8 billion. For PNC OPAT, 6.2 billion.
Speaker #1: If we look at the yearly picture, CSM amortization will continue to grow steadily. That will be a main driver of OPAT, and for some of the regulatory guidance for P&C business, it is underwriting.
[Company Representative] (CPIC): That will be a main driver of OPAT. For some of the regulatory guidance for P&C business, its underwriting profitability will continue to grow, thus contributing to group OPAT. In the long term, we are going to improve CSM growth so as to make it an underpin of our OPAT. Although there might be changes in product mix, there will be some pressure. However, as the industry grows as a whole towards high quality growth, we believe OPAT is on a good trend. CPIC is the first echelon, first here listed insurance companies. We believe we are competitive in this regard. Well, let us welcome the next question. Thank you. I am Li Jian from Huatai Securities. First of all, my comment on your performance, I believe CPIC is a balanced company in terms of the liability and the liability side. I have questions.
Speaker #1: Profitability will continue to grow, thus contributing to Group OPAT in the long term. We are going to improve CSM growth so as to make it an underpin.
Speaker #1: Of our Opat . Although there might be changes in product mix , there will be some pressure . However , as the . The industry grows as a whole towards high quality growth .
Speaker #1: We believe Opat is on a good trend. CPIC is a first echelon, first tier, listed insurance company. We believe we are competitive in this regard.
Speaker #1: Well, let's welcome the next question.
Speaker #3: I
Speaker #1: Thank you. I'm Lee J. M. from Huatai Securities. Now, first of all, my comment on your performance: I believe CPIC is a balanced company in terms of both the asset side and the liability side.
Speaker #1: Now , I have two questions . Number one , for life business , your product margin is growing up . This is , well , quite rare among your peers because a lot of margins , for example , because of the transition toward the life margin will be under pressure .
Li Jian: Number 1, for life business, your product margin is going up. This is, well, quite rare among your peers because a lot of the margins, for example, because of the transition towards a par life, margin will be under pressure. But how can you improve your margin? Is it sustainable? Second question. On the P&C side, underwriting profitability is improving, loss ratio, expense ratio, both improved for auto and non-auto business. Around the 95% combined ratio. Can it be sustainable? Thank you. Thank you for your attention. Let me answer the life question. In terms of margin, MBV and BV margin are improving. Going forward, we believe we are going to maintain stable margin. How did we do that? That is mainly thanks to several things. Number 1, with regard to the regulatory rules regarding the integrity between reported and before filed and the actual expense.
Speaker #1: But how can you improve your margin ? Is it sustainable Second question on the PNC side , now underwriting profitability is growing . Is improving , and loss ratio , expense ratio , both improved for auto and auto business .
Speaker #1: Now around 95% . Combined ratio . Can it be sustainable ? Thank you Now thank you . Thank you for your attention . Let me answer the live question now in terms of margin , MV .
Speaker #1: MV margin are improving going forward . We believe we are going to maintain stable margin Now how did we do that ? That's mainly thanks because thanks to several things .
Speaker #1: Number one, we are digging into the regulatory rules regarding the integrity between reported and record filed and actual expense. Secondly, we will continue with customer segmentation for this year.
Speaker #1: We can see we improved improved in this regard . For example , we now can very accurately identify different segmented customer . For example , we launched a AI system to previously last year , we focused on improving customer customer experience .
Li Jinsong: Secondly, we continue with customer segmentation. For this year, we can see we improved in this regard. For example, we now can very accurately identify different segmented customer. For example, we launched an AI system. Previously, last year, we focused on improving customer experience. This year, we now improved the system to better identify different segments of customers. For example, better identify their different life cycles, life stages, et cetera, so that we can more accurately pinpoint their actual needs. Differentiated business development for customers. For different segments, we have different approaches. We can approach them online and then follow up offline. I have some numbers for you. With this kind of customer relation development, we see some changes. Number one, for example, we have more customers from bigger cities and actually, premium per customer increased by 3%.
Speaker #1: This year, we have now improved the system to better identify different segments of customers. For example, we can better identify their different life cycles, life stages, etc.
Speaker #1: so that we can more actually more accurately pinpoint their actual needs and differentiated business development for customers . For different segments . We have a different approaches .
Speaker #1: We can approach them online and then follow up offline. I have some numbers for you regarding this kind of customer relation development.
Speaker #1: We see some changes. Number one, for example, we have no more customers from bigger cities, and actually, premium per customer increased by 3%.
Speaker #1: And more customers are pay are paying more attention to their protection And thirdly , for the issue of product , we are improving product structure Several things here in terms of the product format , we are making adjustments .
Li Jinsong: More customers are paying more attention to their protection. Thirdly, for the issue of product, we are improving product structure. Several things here. In terms of the product format, we are making adjustment, for example, be it traditional or participating life. Secondly, in terms of premium payment, five pay, 10 pay. Now, these five pay, 10 pay products are improving in terms of proportion. Thirdly, in terms of function, we are launching more long-term care products. Fourthly, in terms of the horizon of protection, duration of protection, we are also expanding that. Also fourthly, we are improving the health and wellness ecosystem. The big health and wellness strategy is our top three strategy for CPIC Group. Fifthly, we are improving refined management. We are trying to improve customer experience in this regard. Sixthly, we are continuing to improve AI or digital empowerment.
Speaker #1: For example , be it traditional or participating life . Secondly , in terms of a premium payment , five pay , ten pay .
Speaker #1: Now this five pay ten pay products are improving in terms of proportion . And thirdly , in terms of function , we are launching more long term care products .
Speaker #1: Fourthly , in terms of the horizon of protection , duration of protection , we are also expanding that . Also . Fourthly , we are improving the health and well wellness ecosystem The big house and wellness strategy is a top three strategies .
Speaker #1: Top three strategies for CPIC Group: and, fifthly, we are improving refined management. We are trying to improve customer experience in this regard, and sixthly,
Speaker #1: We are continuing to improve AI or digital empowerment, digital empowerment. So, we are going to further improve our MVPs and MV margin from these angles.
Speaker #1: Now let me answer your question on the P&C business. Now, the combined ratio for the first half of this year continued to improve, which now stands at 95%, down by 1.3 points. Now, combined ratio, loss ratio, and expense ratio—
[Company Representative] (CPIC): We are going to further improve our MBV and MBV margin from these angles. Let me answer your question on the P&C business. Combined ratio for the H1 of this year continued to improve this year, which now stood at 95%, down by 1.3 PTs. Combined ratio, loss ratio, and expense ratio, they both improved, which is a quite big feat. The reasons, I believe there are three reasons. Number one, we improved or adjusted our business philosophy for P&C business. We remain compliant to focus on risk and quality business. We focus not only on volume, but more on quality and efficiency. We implement our fixed targets. For example, by focusing on income, on profitability, on cash flow. This is something we do on all levels of our business. If we look at the daily business, we did two things.
Speaker #1: They both improved , which is quite a big feat . Now , the reasons I believe there are three reasons . Number one , we improved .
Speaker #1: I mean, we have all adjusted our business philosophy for PNC business. We remain compliant and focused on risk and quality business. We focus not only on volume, but more on quality and efficiency.
Speaker #1: We implement Our big targets for example , by focusing on Focusing on income profitability on cash flow . This is something we do on all levels of our business Now , if we look at the business , daily business , we did two things .
Speaker #1: Number one , we adjusted the structure combined ratio of loss ratio was 0.8 . That is mainly because of we proactively adjusted adjusted our business for example , personal credit guarantee business was terminated and our risk exposure this for this in this regard will were basically removed by by this year .
[Company Representative] (CPIC): Number one, we adjusted the structure. Combined ratio of loss ratio was 0.8 PTs. That is mainly because of we proactively adjusted our business. For example, the personal credit guarantee business was terminated, and our risk exposure in this regard were basically removed by this year. Secondly, we cut our expenses, cut our costs. Our expense ratio was down by 0.5 PTs. We strictly implement regulatory requirement regarding integrity between filed and actual expense. In terms of our business operation, we continue to improve anti-fraud, and also we continue to improve the management of our vendors. But of course, unsettled reserves improved by 3.3 PTs. That is to say, we have a very good foundation for the overall improvement in underwriting profitability. Another thing is that we are now improving our risk reduction capabilities. So it is not only our risk management, risk compensation after accident occurred.
Speaker #1: Secondly , we cut our expenses , cut our costs , our expense ratio was expense ratio was down by 0.5 pts . We implement strictly implement regular requirement regarding integrity between filed and actual expense In terms of our business operation , we continue to improve anti fraud , anti And also we continue to improve the management of our vendors But of course Unresolved Settled results improved by 3.3 points .
Speaker #1: That is to say, we have a very good foundation for the overall improvement in underwriting profitability. And another thing is that we are now improving our risk reduction capabilities.
Speaker #1: So it's not only our risk management risk compensation after accident occurred , we now move it forward to make it more life cycle for life cycle for example , we now collaborate with universities and other research institutes to do research on this kind of risk reduction For example , we have we are now developing a catastrophe reduction engine And by leveraging our own risk radar in the first half of this year , we we have served more than 100,000 customers in terms of offering them anti flood services .
[Company Representative] (CPIC): We now move it forward to make it a more full life cycle. For example, we now collaborate with universities and other research institutes to do research on this kind of risk reduction. For example, we are now developing a catastrophe reduction engine. By leveraging our own risk radar in H1 of this year, we have served more than 100,000 customers in terms of offering them anti-flood services. We better reduced this kind of flood risk, and offset this kind of impact from extreme weather events. Thirdly, we are developing a long-term protection mechanism. That is to say, starting from talent, technology, and evaluation. In terms of talent building, we have hired professional talents, especially biomedical sphere and autonomous driving, et cetera. We need to make our people more professional, have a more professional team.
Speaker #1: So we better reduced this kind of flooding risk , flood risk and offset this kind of impact from extreme weather events . And thirdly , we are developing a long term protection mechanism , that is to say , starting from talent , technology and evaluation .
Speaker #1: In terms of building , we have a hired professional talents in especially biomedical sphere and autonomous driving , etc. so we need to make our people more professional , have a more professional team At the same time , under the group strategy We are put in place a relevant PNC scenarios .
Speaker #1: For example , AI application scenarios , claims , claims , settlement , AI customer service , I believe technology is playing a big Thirdly , in terms of performance evaluation , we put efficiency .
Speaker #1: First, we focus on compliance and risk management so that we have a better foundation for quality growth. I believe the biggest challenge for PNC company is climate.
[Company Representative] (CPIC): At the same time, under the group strategy, we are putting in place relevant P&C scenarios. For example, AI application scenarios, claims settlement, AI customer service. I believe technology is playing a bigger and bigger role in reducing costs. Thirdly, in terms of performance evaluation, we put efficiency first. We focused on compliance and risk management so that we have a better foundation for quality growth. I believe the biggest challenge for P&C company is climate change, uncertainty of climate risk. For example, El Niño effect. This round of El Niño effect, a lot of the typhoons in China have given us more risks, not to mention this kind of storm and other kinds of landslide. It gave us some challenges, but we are still confident. We will continue with our prudent strategy to address the challenges.
Speaker #1: I mean , climate change , uncertainty of a climate risk , for example , El Nino , El Nino effect This round of our Nino effect , a lot of typhoons in China Have given us more risks and not to mention this kind of a storm .
Speaker #1: And other kinds as well—landslide, for example. I mean, it gave us some challenges, but we are still confident. We will continue with our prudent strategy to address the challenges.
Speaker #1: On the whole, I believe we are improving our efficiency and quality of business. This trend will continue. I hope that we, as the PNC company, can make more contribution to the Group as a whole.
Speaker #1: Thank you for the questions . In the interest of time , we now enter the Q&A session and before the meeting . Actually , we solicited some questions from small and mid-sized investors .
Speaker #1: And these questions were already answered previously. For example, regarding the mid-term or interim dividend payout product strategy, as well as the business outlook, etc.
Speaker #1: . As a etc. we have already covered those questions . And if you have further questions , we can take it offline . And for the online broadcasting questions will be answered .
[Company Representative] (CPIC): On the whole, I believe we are improving our efficiency and the quality of business. This trend will continue. We hope that we, as a P&C company, can make more contribution to the group as a whole. Thank you for the questions. In the interest of time, we now end the Q&A session. Before the meeting, actually, we solicited some questions from small and mid-sized investors, and these questions were already answered previously. For example, regarding the interim dividend payout, product strategy, and also business outlook, et cetera, SAA, et cetera. We have already covered those questions. If you have further questions, we can take it offline. For the online broadcasting, questions will be answered in terms of text messages. If you have more questions, you can contact our investor relations team. Well, that ends our meeting. Thank you. Goodbye.
Speaker #1: In terms of text messages . If you have a more questions , you can contact our Investor Relations team . Well , that ends our meeting .
Speaker #1: Thank
Speaker #4: You .
