Earnings call transcript Q1 2023

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Operator

Thank you for standing by for Fanhua's First Quarter 2023 Earnings Conference Call. [Operator instructions] I would now like to turn the meeting over to your host for today's conference, Ms. Oasis Qiu, Fanhua's Investor Relations Manager.

Oasis Qiu

Good morning. Welcome to our first quarter 2023 earnings conference call. released as and well were our available results website IR as earnings earlier are today on The on Newswire.

please risks those made number filings risks undertake from Form could Harbor include, projected this law. including materially statement continue, and differ forward-looking contain of Such Act of those our uncertainties do Private any business not we anticipated. note in our be accuracy discussion to Reform our the this applicable update cause Before with of information The today to Securities forward-looking limited Litigation not results statements that of to XX-F. We on impacted but as or under except and provision Safe under SEC, obligation may uncertainties XXXX. the registration actual the US outlined that will statement by the required a

Chief Financial in Operating a Mr. Lichong review after are quarter us session Officer, will provide highlights financial Yinan Chairman of Chief will There XXXX. remarks. Ge; first Executive Q&A the Peng a our Chief and and Hu; Officer, Mr. prepared Mr. Hu operational Joining our the Liu. today be Mr. Officer,

Mr. turn Hu. will over the I call Now, to

Yinan Hu

our Good release. call. highlights repeating in joining some reported good of results Thank of our today's morning earnings and I you week for last the evening. conference will be first quarter

first quarter metrics. with Fanhua mentioned, we XXXX, solid and operating various with industrial As of across key the the positive strong over the growth results environment achieved over period macro

growth RMBX.X industry of billion, up significantly to outpacing premium Total premiums insurance by X.X%. XX% life

to by revenues listed XX% million, to and significantly our XX.X% XX.X% to up estimate. Chinese income RMBXXX.X by growth RMBXXX.X previous exceeding life up rate premiums above business XXX.X% Total up New the was million, operating year-on-year RMBXX.X million, by insurers. by the achieved significantly

strategy is we specialization, business service in to made are sustainable demonstrated insurance comparison to from through to This open-platform. and strategy to peers hours of that we For our results. demonstrate starting this us first well-defined our as express relative growth industry apart have professionalism, driving we quarter this our competitors our set quarter, by executing have digitalization and on our key list

allow from over are execution strategy. that of me operation Next, three key to direct please go the highlight results our

strategic our in significant Firstly, productivity. quality on quality focus growth increase produces agent and

XX% and over Our also Million-Dollar together, agents The XX% And in professional agents the Round sales grew members and for period respectively. XX% number grew up agents XXXk year. of our XX% of same from period, Table premium year-on-year, this of high by productivity XX% year-on-year. accounted they performing last the

Secondly, acquisitions we over our already two quarters. from our material and seeing open-platform past contribution the are

Open As business and external our over by XXX% at new end Business to over Service over the grew quarter, Cloud with institutions of XXX million. connected RMBXX.X has division the premiums

as We general the period, and through as M&A agency China, made are well three in managing also leading agent leading the on that executing over [indiscernible], industry a strategy including two of companies. acquisitions other consolidating

the consolidation accelerate to license insurance in market. managing of intermediaries to the Looking general agent ahead, to aim we small the model utilize medium

the premium end business of over new the licensed As million RMBXXX connected with in [indiscernible] brokers and quarter, XXX contributed of quarter. the is

agents delivering our drive helping leading only material our The also higher but us not our strategic on customer is to in business and service digitalization focus also on digital of is improvement Finally, for strategy operational execution platform, quality. gain. productivity

and for our of to renewal quarter, industry-leading turn months persistency the XX%, of levels ratios in higher our XX translate ratios and drives higher improved insurance During the months quality persistency bonuses respectively. for and XX% Achieving XX to clients, both business. business

reflected to scale year, with in focus combined the digitalization and a last last in same in despite deliver up reduction year. investment, economic us initiatives open-platform substantial and in from in allowed to expense XX.X% same in period This the increases million significant from first strategy period is ratio has [indiscernible] digital to operating in improvements. open-platform RMBXX.X significant the XX.X% the when quarter operational The XXXX, efficiency

And the this we were results of the quarter. only first not contribution, reflected like are entities we the in results have Fanhua, contribution, acquired our in of financial delivered thus the have here far to revenue still that in mention instead we income operating and into process acquisitions yet as integrating

integration as the synergies results. material in in synergies second revenue the see we to future half to this and be and reflected completed of system However, expense our expect [indiscernible] of IT year,

we're XX% Our life quarter's operational our foundation a first and XX% And policy also no premium profit target us we our for this year-on-year. grow strong than quarter, quarter also and We preparation to less third the lay achieve the improved the will be second solid second will to full that XXXX insurance [indiscernible] half. is year believe and for target. for and operating achieve or exceed we by are make to the confident for able target, also

through second we and the in open-platform. in few years, execution following strategy specialization, on next year, as will to To the of coming to we our digitalization strategy initiatives. focus stick in will on for and well the the future fully as quarters, the pursuing And sustainable the half, prepare professionalism, continue -- our growth future

Firstly, resources, abundant competitive to entire cycle elderly on families lifecycle trusts, entire the and education health various expand their of offerings customers the our facilitating insurance to advantages, needs differentiated by service diverse settings, services, our insurance care in care, solutions. focusing we [indiscernible] including -- leveraging over and our serving continue our sales on service establish

external to thereby point this the X,XXX certify to training Fanhua's agents, helping differentiation. Consultants, train trust the as elite Family we Secondly, X,XXX plan professionalism us spending candidates year we and of And increase courses Increasing Office on plan another -- FOC, training in to the or train attract hosting to FOC talent top for this external courses and insurance industry. providing

license targeted top members, our plan In will for we financial their agents our [ph] levels, to further obtain holder according the including among to management those improve requirements response to full them will agents, as personal so are their professional Tier qualifications professional training MDRT who agents. of help regulatory image and productivity. professional to Thirdly, implement certifications we to provide and

teams Firstly, targeted we in intend particularly through We strategy and can to M&A. high-quality dedicated fully platform open-platform plan our digital business. independent to accelerate develop the market bring open consolidation industry talents, to sales who and to

by system. target migrate For digital XXXX, tenant XXX to our our of platforms is customers to institutional our

our each and every Fanhua. the milestone of a fills proud company. we important an is marks us It truly that is year XXXX for It Fanhua, one for. which anniversary at XXth of are

economic XX Over than and we industry years, time proud emerging navigated stronger through financial have that the past China's cycles, before. this we are

no the a XX best I child always For the having position company this ago. company my my XXXX. now company position By founded I in it's company time Chairman me personally, exaggeration, in of and second being at interest Chairman the is led CEO the is the of the years of XXXX CEO of being second heart. being This of Fanhua, and have and had of

agents, will over we and team next and market, years be expected right the that to capability the create in we the level, ahead, from human right are senior the confident across Board managers, from intend -- strategy, invest deliver the execution, all right we resources to the Looking the individual to best our Fanhua able levels, XX attract our in the significantly frontline talents will all our was to stakeholders. results we to beyond

This concludes my presentation.

the questions. floor open Thank your Now will for you.

Operator

line the Yuyu. Yuyu question [Operator [ph] from go Instructions] Our CICC. first Please Zhang from of comes ahead,

Unidentified Analyst

the product [ph]. first related the to So demand was question finished

to returns new China previously, products. So lower regulator asked insurance has for estimated insurers

and products? take in momentum see the so the of of reduced due you changing [indiscernible] mix you product [indiscernible] And do gradually. to also mainly savings know do And last the we the QX, those the average the product We it's [indiscernible] see the second commission. and how rate strong So sales? question, expect year

a really good FYP think a I really impact income, our performance. while it's brokerage a [ph] our on has negative

could in around on conference of open-platform see to and plan invest your you strategy. small some future of you and call previous insurance [indiscernible]. the middle or what [indiscernible]? In more the actions XX how color terms or acquire So take rate said the And is question agencies share you you agenda last sized

Yinan Hu

answer Yuyu. questions, he the the Lichong, your our commission And CFO for Yinan himself question. regarding Hu. question in the will second your third question like to and is trend our you CEO first Hu, rate, Mr. regarding M&A to Mr. invite progress. This Officer address the Thank to our answer will Mr. Chief Liu to Operating

Lichong Liu

products. very see life from the annuity adjustment products, life we and the in with So strong savings do pricing, returns imminent downward new in demand whole the insurance insurance including product products for guarantee

However, the demand still second robust factors. the that term, change? believe will for how contributing of longer half, products remain in three for because the savings will We the that

to populations strong very products risk the demands why can Firstly, for in we've seen have in lower appetite needs ageing among retirement. still consumers. the and their their population acceleration And that ageing cater

have we secondly, interest in rate in then long-term. the And the seen downward trend

[indiscernible] a do attractive quite did attractive downgrade in of safe interest a with choices, that and as [indiscernible] the Thank And in rate kind kind safe offers terms pricing why the product returns. economy, consumption we're new not also [indiscernible] of So provides because though investment of downward asset X%, even or product seeing insurance you. downgrade that are class. for softening the a economy still mainly a softening thirdly, to

Oasis Qiu

this question. CFO to would answer like

international -- costs definition First we've will of as of the requirements, changes China. Fanhua rate. trend products, regulators that the And institutions have overall because commission or wish of as in for premiums of for from the so, actually to on to the will their we with all product, be seen practice financial product lower the clarify a mix in well costs rates. he the well choose variety rate term impact point commission as pay the downward And to and the line like wide -- regulators on commission probably in to would financial then as customers insurance in that sell view

the quite as the company -- basis, revenues net matches the focus and having our commission rates said I that margin, ratio. if annualized like -- that of to well equivalent equivalent persistence basis on but operating However, on gross high. premiums, key first annualized year to first ought our remains And as premium would emphasize that, year

company's better are the I think financial to operating this health. measure matches the

will to our As that sales that Mr. product be transition savings And capabilities cost in with pricing, products there upcoming probably for lower. impact new that company insurance will the the short-term. which in the means for will be Liu mentioned changes some -- the

robust. remain will we However, in term, the demand still for products longer that the believe savings

And that, instead or said to also, for should address insurance -- their the the diverse customers solutions to demands, ability intermediaries -- comprehensive believe of that competitive we for comprehensive key on having key selling offer still products. simply insurance advantage established service be a

actually trust for us services, -- include As our believe are further to Mr. solutions is enhance that our like education health Liu well competitive [indiscernible] customers. care, -- to this mentioned advantages. -- service as And are further as broaden we to to now we key offer offerings would and the

well believe Mr. improvement target profit a operating mentioned our see XXXX. gross XX% XX% this and I continued persistency income as first if year also that net year achieve we in that margin, target, will we also margin our can full ratio. year-over-year Hu premiums growing at as we for by

Oasis Qiu

in address Hu, more high-quality Or questions growth, market higher which our industry business And acquisitions. Mr. quality with actually M&A a in this the like M&A the evolving our favorable strategy. Basically, happening environment us is created the to means favor towards now to What's company. your much the is for that right of of [indiscernible] lower He costs. pursue would i.e. strategy. on CEO of is

So we target strategy our open-platform to strategy. to will no and There's for stick acquisition our this change M&A year.

M&A is combination. not business purely

a as I'm for insurance be and drive in on in quite just longer moving capabilities AI believe applications. well confident contributors Fanhua think technology business we that the as of terms our basis acquisitions, our found light far In intermediary. digital technology, investments -- I of China, our the key and IT that technology stayed ahead in Asia. to growth term, technological And peers will has for capabilities

restricts we However, that right is other the and growth really observed, of China, that's now that markets not And reason investment technological in intermediaries. enough. Asian further in key the insurance

that However, demand the we strong. is technology for believe quite

invest While in cannot are of that we their lot to companies seeing as intermediary licensed IT also as on a insurance own. afford systems independent really well agents

export to M&A our of our core digital the technological capabilities. So, digital advantages and

double insurance So and benefit operating more them Fanhua's help the to that advantages and for expenses by we technological momentum allow lowering sales can building capabilities companies to their intermediary from at and M&A growth. data for quality empowerment quality we quantity. future technological sustainable you. we this our And looking in pursue instead to actually targets, Thank are -- of acquired entities

Operator

you. Thank

of Our next Wong question, your Dan? line the Dan from comes from question Please JPMorgan. ask

Oasis Qiu

So, three He the has questions from questions. JPMorgan's.

a agents The because the probably is And competition will that's productivity. not the base productivity. regarding And of agent low see quarter, in the first strong view we question But sustainable productivity in our high the agents be of whether he will in wonder first market. of our or improvement last year. a fees

probably now but strategy, reserve pay The was the share company's announced question capital second company for acquisition. the plan a to more deployment December the plan And in How to to like is company's a progress. the regarding for the cash company buyback plan in the M&A and year, buybacks? share buyback share [indiscernible] what's would last that plan the company's to

with risk. the more business more as question supervise has believe And But third regulator intermediary volume of the the that lower a stringent we help a will on markets. improve and company as company to regulations regulation. quality compliance the supervision is insurance to quiet framework well adopted stricter sales that regarding time The

the what's for So there the company? opportunity

question Lu will our And three share Hu third regarding be himself your the question question the question answer [ph]. Mr. among Again, your CEO will and Ge buybacks productivity. the first litigation will divided answer management, second Mr. Mr. agent regarding answer regarding

per actually are in the that the per dropped actually activity seeing of there agents We reasons. capita years on few number And been significantly that have the contrary past market. over productivity are I two agents have believe the the increasing. that of

the relatively illness transitioned all, higher customers critical demand end kind products, products products products. type of lower of has to -- savings demand value the First -- i.e. from of

statements knowledge involves larger. secondly, complicated areas. of more type comprehensive this the product product because is ticket size more or for a are required And this knowledge And then and management financial

So usually higher higher this by type of so a agent. products agent, are end

for secondly, critical work well. repaid online has for by [indiscernible] who products, insurance They sell kind ages, then those kind of products. the illness some to replaced of just And And as can will critical medical Illness products. be only naturally

in have those knowledge who can knowledgeable more are who only So comprehensive industry. enough stay the

or individuals worth by or individuals. focus high worth net or more customers professionals our this ultra to shifted has Fanhua require high agents. serving middle professional groups And class net more customers service hired as and

the number And of professional substantial MDRT of to the we a in as growth well result, set have train past help have a professional So the professional as agents, first improve sought agents why capabilities. in XX% seen that's investment in -- also years. increase a investments And in number we recruit a to see we to growth in in agents MDRT years, to few quarter, the we agents. empowerment our to our up to as increase digitalization their and have them past agents

this that, have right acquiring addition we strategy. that we service those food in quite is to So believe crucial. And

able offerings, why services top we So be our this or The to insurance trust wealth part as diverse our able top insurance of our cared considered agents, customers. be plus serve our our the this our to have demands management, plus will the with agents insurance Elderly overall important offerings, service agents as bleeder high-end of will strategy. that's agents, serve

also the high-level. of our I was men demand that believe policy the so So out and at our the with -- and amount agents, the productivity the agents, the with quite and of top of ability customer that product

Oasis Qiu

like your would Ge buyback. answer second on Mr. share question So to

to quite since that have I no I is recap IPO. the of on company Fanhua So, believe a responsible use shareholders. capital

cash to our spent RMBXXX IPO around RMBX.X spend share total million totaling XX% billion billion, our have We flow, billion. on over which operating RMBX.X buyback, since amounting dividends cash RMBX around of and like on represented

commitment that returns. shareholder So shows our maximize to

In first XXXX, And a that our saw strategy. Fanhua, our softening has in of in term. X has of changes. build COVID-XX strategy past XXXX. momentum growth a the have to I be however, since the the to we to the years substantial in contributions the on due future material industry and view, sticked earmarked my In economy, execution the quarter should for sustainable believe cash longer rapid undergone

So including our initiatives, such as M&A.

means buyback because significantly efficient And shareholder what's to in maximize will much X more stock happening the of our believe that a years, share past dividends. been We returns undervalued. compared to has be

[ph] volume December. window progress restriction the buy, So US$XXX,XXX. a buyback buyback. That's share the trading million have ADS on we [indiscernible] terms and despite the announced of company in we our And share that's of why period, amounting made plan can restriction about the purchased last XX that that we've to the

add I is if we have to that first would the this the not its agents your no comment selling We like products. by insurance to on strategy a they productivity years. that matter insurance believe professional to high over question. will sustainable sells And that sustain only XX elite past properly, them or fit also how are, it how the solely sales products for be

a better demand agents a is I offer for them planning, financial become comprehensive also trusts, themselves higher a not advisors So for customers. serve insurance customers to but advisors that to more transform trend customers or transition become sustain just productivity. transition or insurance, tax that irreversible and advisors, to legal their that their And covering solutions will believe enable to to can financial

This regulate on much will out companies that help company. much of challenge. also other for address on higher have requirements independent compliance. agents a -- the to high who a huge any require But great to the can opportunities compliance -- a on compliance institutions at be and will the future. pose pose is the I that believe issues, So they or time, regulatory that companies the it the same

our has is -- vision what providing a to the we've whole a to industry. company been sales dedicated to organizations a transform or also our services that the And this management platform be few been unified unified long-term My technology. model building And platform the will on the platform in modeled years. provider like in the sales infrastructure infrastructure of we're XX% contributed from working of and industry. insurance XX% we're basis the the existing insurance hoping pushing past by We're intermediaries the our services to Right a I'm risk revenues company on that generated digital into future a now platform compliance or forward revenues. the was industry. provided to the

regulation a new challenges players. to The industry changes of lot pose great

consultants However, we opportunities And Boston see on Group and changes it capture as to our market we as for response Fanhua. opportunities, a have give strategy. to the in us the returned [indiscernible] great market our open-platform advices Consulting

their has compliance far, view you. has us Phase deliver I had results. And model And great work, going for so model believe will to BCG completed of that our three this and helpful digital be risk and helpers first this Thank greatly management and forward. digital

Operator

remarks. further the I'm you. conference Ms. no for Qiu closing back to turn questions. showing Oasis Thank now I'll

Oasis Qiu

our Thank call. you for participating in conference

contact questions, further any you. feel have free Thank you us. If please to

Operator

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

may You now disconnect.

Oasis Qiu

you. Thank

Yinan Hu	Chairman and CEO
Lichong Liu	Chief Operating Officer
Peng Ge	Chief Financial Officer
Oasis Qiu	IR Manager
Daniel Wong	JPMorgan

AIX (AIFU) 5 Jun 232023 Q1 Earnings call transcript