AIX (AIFU) 21 Nov 232023 Q3 Earnings call transcript

Thank you for standing by for Fanhua's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within 3 hours after the conference is finished. Please visit Fanhua's IR website at ir.fanhgroup.com under Events and Webcast section. Today's conference is being recorded.

If you have any objections, you may disconnect at this time. turn Ms. over to for your like conference, today's now the to meeting host I'd Fanhua's Relations Qiu, Oasis Investor Manager.

A be Thank you. today's Third Call. Fanhua's everyone. call. Welcome will Good morning and Quarter good XXXX website on our available evening, to replay after also Earnings

discussion a and earnings During call, the non-GAAP Reform safe statements note are in our and financial And forward-looking be the finally, differences that non-GAAP financial of discussing Act the measures will this of some between release. made please provisions will XXXX. harbor Litigation measures U.S. we contain reconciliation today the GAAP available Securities Private under of

not be including information, uncertainties stated. statement are undertake events differ number of required outlined SEC, impacted the do beliefs forward-looking to We based made but Such any that current management's business concerning risks law. applicable under statements in and as may and with expectations not cause to company obligation limited update risks future the or results uncertainties our Form our actual to and projected XX-F. its may by filings These impact those except include, could materially on a on therefore, registration those our from and

the our can to presentation note be are and market a relevant business Co-Chairman Ben this Mr. our start operational prepared today the and after recent by our proposition, will going Co-Chairman financial and material us call call outlook who Ben on forward. our Officer, and of Mr. strategy Hu; Executive trends will Hu review Joining his session followed please Chief find and There website. Lin, Mr. from that Mr. remarks. Yinan And Chief a Lin. official Strategy highlights provide will Officer, you Q&A our discuss sharing by view

Hu. over our turn may Mr. With will translate the that, and Mr. Lin, Ben call for Co-Chairman, Mr. begin. Hu; to and Co-Chairman will Hu, our I CEO, you

[Foreign Language]

Good us you evening. and for earnings QX call. morning good joining [Interpreted] Thank on our

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wake products, fluctuations rate the premium from period to August slowdown by challenging environment, insurance the very insurance pay in pricing the strategies July evident a growth, to experienced of key to October. sector significant quarter with followed for growth change continue strong life in from But notwithstanding off. a second of life of [Interpreted] the execution has our this

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would this past significant inevitably in, the industry operate have on [Interpreted] the opportunity and intermediary operations, regulatory including X Over the impact discuss quarters, faced both market our changes. to take that like our to changes. I perspective from insurance policy we these

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[Interpreted] of Starting from cap restoration the customer has products. life In era for first life a entered some may take X% demand term, time. the August, officially traditional of insurance industry insurance the short pricing rate the of

backdrop considering in a However, with rate bank declining products class. of insurance believe asset deposit remains longer term, X% interest attractive the defensive rates, traditional an we the that guaranteed

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in recent bancassurance the addition, the and the independent coming extend we expect the commission the will channels in rate that to In [Interpreted] broker channel regulator agency months. changes also

and towards term, While both maintain we rate sustainable insurance enforcement perspective adjustment pricing short-term could industry in the caps the the the trajectory. more rate that, significant a entire industry, higher to impact will growth the the and of the policy challenges of present long implementations steer commission these quality

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more become implies is and likely possible services. players gradually driven also the favorable enjoy is this few future strong shift following innovative This capital leading concentration. more major and the This a think only at [Interpreted] is the companies industry trend that dominating development a market. be to with market capabilities predominantly level evident by The increased even driven and market applicable companies not the but intermediary by commission intermediaries outcome to dominant, of services, of of will ample from consolidation regulatory trend to the these of technology to We are a anticipate product that scenario technological will sales We being a insurance changes. position. and

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to We survive. could future will exit market intermediate and towards work of medium-sized with to that platforms transitioning achieve customer the and trajectory order forefront sustainable essential them a expect platform-based differentiated service back-end larger involve support see their relationship to enabling business broker [Interpreted] them and companies providing fixed envision the small- This capabilities more compliance, operations, companies to to mid-end costs lower larger training. and the and choose or on These enable brokers to development. acquisition to of IT, these the collaborations operations platforms see focus in number allows to at to we to relating market management either large enhance

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our aligns [Interpreted] platform with strategy. This well emerging open trend

in is platform-centric place In transformation take fact, XXXX. more these previously materialize, now company should expedite this it help is entity. essence, could to a that to our likely take sales-focused a a changes to but catalyst thought In early looking from years we

should the and advantage. scale gain in us to our give opportunity turn, grow This, share more market

extend and stronger looking distribution small- but collaborative Leveraging our in relationship our are and capability suppliers, sales, customer mutually service, also intensify product to beyond efforts product and our with to services. the and IT aim with medium-sized We sales companies our to stronger suppliers beneficial we also in insurance key our technology foster partnerships. and

product develop With more we market partners. we development with and stream diversified closely revenue turn, insurance generate pricing aim to our aim and partners to greater work In from dominance, greater power. scale a our in

[Foreign Language]

our prospects evolving We capitalize believe opportunities numerous in firmly strategy on industry and the company's market positions in us future confident that the the to well of [Interpreted] landscape. remain

with value commitment for We our are of our dedicated long-term implementation advancing to the established strategies shareholders. delivering to a

[Foreign Language]

over [Interpreted] to allocate English the this us go and save we'll for more I just later. time, will in time Q&A

September August third life adjust quarter XXXX. August of caused in July, spike offerings. as pricing sales by in for to and changes was which product a slowdown a partners business to our results in new from the I'm time products insurance their take to pleased present earnings then sales new followed So effective our The latest in insurance

our under Despite persevere that solid, and results quarter total RMB this X.X insurance disruption, volatile well, key to confident working by life a grew even quarter we year-on-year allowing our remain us strategies XX% billion. our over third industry results was the of are to environment. highlights The include premium

XXX year First RMB million. XX.X% by grew premium to

shareholders a Net disposed they in XXXX investment year-on-year in to million, public. to gain unrealized XXX.X a and X.X% division Fanhua of a Cheche This due an back recently cash went Technology convertible our of RMB and our to XXX%. P&C income hold significant we which attributable in largely increase Limited, to uplift from is for consideration came stake loan. representing Cheche combined

We are convertible stake the of loan. Cheche equity planning upon the of in part convert exercise to options

professionalism, Our success. the and platform open of strategic remains specialization, on focus cornerstone digitalization our

number Our operational and our reduction highlights efficiency substantial to commitment digitalization include: one, has improvement. to led cost

efficient digital to AI-enabled in lot solutions We Our to leveraging are artificial personalized of our and Like distribution further AI platform of system assist trialing tools with smart transformation, many introduced recommendation algorithm. business. intelligence system, assistance offering digital and and smart our avatar, a AI our professionals underwent intelligent in technology insurance clients. customer peers, we

despite investments. to decreased quarter XX% from the IT the significant improvement third last compared year period For expense to XXXX, XX%, operating increased same of ratio our a adjusted

Number team in ensure two, expertise to high-quality the we with needed growth. empowering persist committed XF our remain our training. sales We to conducting

on Fanhua productivity. increase XF, custodian, stands planning retirement in quantity of September office significant trained for is agents in family with Fanhua individuals the policy over positive led in top-performing evident As agents also impact XX, improvements which of of consultancy, our increasingly reached the but The number and to observed XX,XXX.

that third RMB The the number year. proportion XX%. XX% to by the period agents from our monthly of by to XXX,XXX. XX% ] productivity capita The RMB of by year-on-year premium quarter XXX,XXX the agents XXXX, increased of to our For to contributing also increased MDRT per compared of XX% same MDRT average agents year-over-year XX% XXX,XXX increased [ rose premiums of and high-performing last also

response built training and the our and net services demand we family launched high personalized the for to upon growing individuals, office system. certification XF program worth incubation In diversified among adviser

of talent traditional from attention have financial other for preparations initiated already this an professional significant industries Sichuan specific the and has of the outside initiative attracting in aim and garnered industry, the Guangdong within we With the program. industry,

Number deliver three, to material our platform continues results. open strategy

have We over contributed September platform collaborations, our have our strategy. M&A, sales to companies success successfully XX.X% as agency linked with of with XXX volume the combined our highlighting XX. open of third-party These

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the our unrealized and we third from Finally, view cause as could our regarding during important in relationship of our holdings to quarter net recognized our to I Cheche's the Cheche. that gain is profit shareholders is hope remind We one-off clear that in mentioned listing Cheche you of to XXXX. volatility earlier, the in game like of our nature, The a investment would this misunderstandings short legacy term. an we most with over can implication continue Cheche

business Our strategic of have our move. on to P&C be our divestment to business insurance our proven focus core life and the Cheche right

complete are the NASDAQ. be for delighted their listing on to to Cheche We able also

cap anticipated industry. commission to short-term expected ahead to the for implementation Looking bring entire is the quarter, about of fourth the challenges

catalyst important track an Mr. accelerate of from as as strategy to to However, highlighted see earlier, a and we also platform our fast oriented. open the a Hu platform transition company development this our sales-oriented

Insurance, our and In are the Hong that opportunities ASIA and we our similar Asia for Kong companies. outside with We're exploring continue looking partnerships teams collaboration market, share that, also opportunities we started assembling to of ASIA Insurance. to seeking business joint for have excited have will actively growth venture we of formed

regulatory in significant. would closing, like continue young, to conscious the industry very we're development. will We at terms in us intermediary very China remains face the I opportunities and that our doubt ahead remain that believe that young no the In time, say strongly is to industry the its also still market same infancy life segment changes. of At of insurance

As a industry direct higher-quality regulator, towards to growth. continue the

have environments. established our presentation. for strong continue This Fanhua I'll shareholders XX deliver This can been gives through confidence track over record for we of changes. turn floor market years, to the our navigating we a that concludes under all and has for Q&A. us

we ready are for Amber, questions.

question first comes from Our line the Yuyu of Instructions] [Operator CICC. Zhang from

regulation. -- my agency in The regulation brokerage call related that mentioned the our fee they it Language] question is So [indiscernible] [Foreign the channel. Language] and [Foreign to as we mentioned first regulator

So could Fanhua? impact you share and it the us some on the whole if industry happens, then more color on,

X subsidiaries second related to is noticed Fanhua ASIA We Insurance. will that overseas with my establish the And all expansion. question

color time you share line on there cooperation? some us? further with share is any you the could So And strategy, could

And my strategy. open last platform question our is about

our open So success on digital to tenants? attract do digital have any how And agreements have much are talent on more further platform? we we that plan

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rate about [Interpreted] So on commission question the your impact.

the terms right weak you've can of that all, to out capital understandable. that life of given been the return, insurance we're very right first is industry We lot So China insurance in coming of is in the investment now policies hearing see going market are regulator difficulties the a of the state companies very Obviously, facing now, challenging. industry environment.

are also very expenses high. Sales

focusing regulated profitability few the by and liability these one, for The reduce months China been to efforts they're the So return; costs overall, impacted is the number X situation negatively have issues. the been capturing by insurance in over life guaranteed the sales last expenses. has reducing trying on: number

of So be think measures are overall, conditions intended insurance long positive over the these the should financial life we improve industry, the which term. to

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essential [Interpreted] insurers well. our need survival So an profitable. our That's ingredient for as business, to we stay for

believe embrace So changes coming our The cost X be policy puts we number that's these number through. operators in And forward. this through the improvements. benefit with us for market through reduce will or two, pressure lower the this costs scale acquisition on impact for going it will lowest to basically to force environment efficiency that will fronts: one, costs. We everyone intermediary their

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competitive scale; professional in mean there intermediary ability think market-leading successful economies By to upcoming have development path a that, increase help environment. through number one, professional two, in we a will new very will should the the advantage also career be be X for for technology, important develop of reduce service. provide to high-quality costs criterias able intermediaries are and number any the We environment: that to agents, which [Interpreted] the

[Foreign Language]

service. about technology competitors, we [Interpreted] right develop only important of And we in with is operate professional fragmented we now, terms and have market have to of that the a X the abilities we X,XXX the companies capability view few these think very that very operational mentioned which in that

why are a companies. So is we by that becoming -- market we intermediary more and this introduced, if potentially in few were be going likely to to expect these see forward, the be large regulations concentrated dominated and China

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platform-centric For last we going a [Interpreted] mentioned changes, from few pure a strategy as I the earlier, company. our regulatory company over years, think, to sales And on has our evolution. focusing to transitioning accelerate these Fanhua, platform is been

of very strategy in technology, market advantages competitive leading many terms is in evident have the We and sense. really our

should We platform IT medium-size think help lot lower launch this intermediaries market. in are first the the to we the that small- the for a to strategy of costs

think well do for changes it with company So to quite these is we're overall, the way we're we to our that the provide fits what and regulatory with trying about what trying industry.

to for sure, will the are In be some pressure. short-term impact, drop. terms commission financial there of rates however, given That's likely

significant to However, by focusing on significantly share increase of accelerating our platform economies strategy, our scale. market we gain and aim

[Foreign Language]

say try again. in to I'll to English this time save

Insurance owns owns So formed Fanhua we Hong have basically X which joint ventures of Kong, ASIA Insurance XX%. ASIA in XX%. with both

Insurance our insurance do As many the essence, Asia Financial ventures, of Fanhua's focusing is onto in China of know, joint these of And X expansion The subsidiary you overseas. Hong Asia we in global Kong. capabilities what aim in launch on Holdings may insurance to with is ASIA stage. is mainly exporting intend the to technological

compared in markets It's our outside is is to now China. our of in mature very sales XXX% of many China sales lot paperless. may basically right now by of a -- As all adoption driven technology you know, app. China of

what's a versus Hong our the brokers, agents if In issue Hong XXX client, of about transaction. [indiscernible], an can insurer's basically cannot app, proposal use for policy insurance issue that to is different was Kong, the and also the policy policy entire broker to China Fanhua's In have where Hong fact, complete you sign a Kong and entire the transaction they have complete Kong, process. In on to all they platform.

spending cost Hong in we all terms for there's Fanhua So we us IT in the RMB export over years, that in into have billions last of Kong. developed opportunity which immense China think IT the XX to

very just Kong competitors charging of already Some apps that year HKD in XXX,XXX comparison. policy are for per our simple policy Hong basically does illustration,

also from you strong Southeast where P&C also that expanding very in have Hong they the with the revenue gain Hong just opportunity expanding Kong. Asia, imagine Kong, Insurance So business. we're into a And can we beyond into ASIA exploring can presence about

really essence with do the to ASIA what that's of we're Insurance. So trying

we life things. is a Number which a stages brokerage license, at there What -- insurance you coming of completing be the local will one, months, more basically that. with can we'll that, few in life up are companies further XX expect up enable Hong in to acquisition, should sign acquiring the Hong over final us contracts Post insurance insurance and we will have increase to Kong, companies with Kong.

into be English is to also Secondly the that very traditional at of we're Chinese already app in Hong our China will market. Kong [indiscernible] stages applicable the and early translating

personnel We relevant are Kong. on resource Hong in also basically the front, working our the recruiting launch very to business hard human

Kong XXXX, be contributor think Hong to So Fanhua. all, I all have I revenue that Thank potentially a you. in confidence will

Language] [Foreign

[Interpreted] Okay.

our it agreements, Number XX have MGA this agreement; So how open was and for and of types platform, we sales it agreement X-way fully to agreement. in want service. one is three because we is there the we relates to about X to using agreement. in we two many now, tenants number on question is explain that that's operation need the the between think that is and agreement. exchange the sales operation are basically sales requires What X a the Right we to Number that promote security the the using data their tenants is data a exchange, agreements. insurer, Fanhua The sales data broker platform. have the lot agreement relating

is the opportunity But very evident.

of system. and XXX we MGA and total agreement the own pool their of largest in of also On IT They connected terms potential is have have our channels, [indiscernible] basically parties the Cloud a on clients. Fanhua --

turn Qiu Ms. the now no comments. conference am Oasis I further any additional Instructions] I'll for back questions. [Operator showing to

Amber. you, Thank

today's Thank please contact free to feel us. conference in for participating If call. you questions, you have any further

participating. concludes Thank for today's conference That you call. you. Thank

now disconnect. You may

transcript [Portions are present interpreter of the were live on an [Interpreted] spoken this that call.] by marked