AIX Inc (AIFU) 2022 Q1 法說會逐字稿

Thank you for standing by for Fanhua's First Quarter 2022 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 irfanhuaholdings.com under the Events and Webcast section. Today's conference is being recorded. (Operator Instructions)

感謝您出席泛華 2022 年第一季財報電話會議。 （操作員說明）僅供參考，本次電話會議現透過網路進行現場直播。會議結束後3小時內可進行網路直播重播。請造訪泛華投資者關係網站 irfanhuaholdings.com 的「活動和網路廣播」部分。今天的會議正在錄製中。 （操作員說明）

I would now like to turn the meeting over to your host for today's conference, Ms. Oasis Qiu, Fanhua's Investor Relations Manager.

現在我想把會議交給今天的會議主持人，泛華投資者關係經理邱綠洲女士。

Good morning. Welcome to our first quarter 2022 earnings conference call. The earnings results were released earlier today and are available on our IR website as well as on Newswire. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause our actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but not limited to those outlined in our filings with the SEC, including our registration statement on Form 20-F. We do not undertake any obligation to update this forward-looking information, except as required under the applicable law.

早安.歡迎參加我們的 2022 年第一季財報電話會議。收益結果於今天稍早發布，可在我們的投資者關係網站和新聞專線上查看。在我們繼續之前，請注意，今天的討論將包含根據1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。這些陳述的準確性可能會受到許多商業風險和不確定性的影響，這些風險和不確定性可能會影響這些陳述的準確性。可能導致我們的實際結果與預期或預期的結果有重大差異。此類風險和不確定性包括但不限於我們向 SEC 提交的文件中概述的風險和不確定性，包括我們在 20-F 表上的註冊聲明。除適用法律要求外，我們不承擔更新此前瞻性資訊的任何義務。

Joining us today are our Chairman and Chief Executive Officer, Mr. Yinan Hu; Chief Financial Officer, Mr. Peng Ge; Chief Operating Officer, Mr. Lichong Liu; and Chief Digital Officer, Mr. Jun Li. Mr. Liu, will provide a review of our financial and operational highlights in the first quarter of 2022. There will be a Q&A session after the prepared remarks.

今天加入我們的是我們的董事長兼執行長胡一南先生；財務長葛鵬先生；營運長劉力衝先生；首席數位長李軍先生。劉先生將回顧我們 2022 年第一季的財務和營運亮點。準備好的發言後將舉行問答環節。

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

現在我把電話轉給劉先生。

[Interpreted] Good morning and good evening. Thank you for joining us today on the conference call. Since the beginning of 2022, the Omicron of COVID-19 variant has been fueling outbreaks in provinces, including Shanghai, Guangdong, Shandong, Jilin, Hebei, and Zhejiang, dealing a severe blow to offline activities and training of our team. In the first quarter of 2022, 1/3 of the training programs and customer activities were canceled. And in most COVID-stricken areas such as Shenzhen and Shanghai, Fanhua's claims adjusting business almost ground to a halt, recording a loss in the first quarter.

[翻譯]早安，晚上好。感謝您今天參加我們的電話會議。自2022年初以來，新型冠狀病毒肺炎（COVID-19）Omicron變種在上海、廣東、山東、吉林、河北、浙江等省份爆發疫情，對我們團隊的線下活動和訓練造成嚴重打擊。 2022年第一季度，1/3的培訓項目和客戶活動被取消。而在深圳、上海等大部分疫情重災區，泛華理賠業務幾乎陷入停滯，一季出現虧損。

The COVID resurgences and economic uncertainties to some extent restrained the relief of customer demand for insurance. Along with the high base effect resulted from the transition to the new critical illness definition framework in the first quarter of 2021, the gross written premiums or GWP of the life insurance industry in China fell by 3.1% year-over-year. Against this factor, Fanhua's first year premiums of life insurance dropped in the first quarter of 2022. However, the GWP of our life insurance business still managed to grow by 10.1% year-over-year, defining the industry's downward trend. Fanhua's 13-month persistent ratio still remains above 91%, while most insurers saw deterioration in their persistency ratios, manifesting the high quality of our business and the stability of our main sales force and operating income reached RMB 20.6 million, meeting our expectations.

疫情死灰復燃以及經濟的不確定性一定程度上限制了客戶保險需求的緩解。加上2021年第一季新重疾定義框架過渡帶來的高基數效應，中壽險業的總保費或GWP年減3.1%。受此影響，2022年第一季泛華壽險首年保費下降，但壽險業務總保費仍較去年同期成長10.1%，產業下行趨勢明顯。泛華13個月持續率仍維持在91%以上，而大多數保險公司的持續率有所惡化，反映了我們業務的高品質和主力銷售隊伍的穩定性，營業收入達到人民幣2,060萬元，符合我們的預期。

Despite mounting external challenges, we have continued to execute on our professionalism -- professionalization, career-based digitalization and open platform strategy and made steady progress in the following key initiatives. One, achieving cost reductions and efficiency improvement. We have been able to strictly control costs by optimizing staffing, closing low-performing institutions and downsizing inefficient outlets, as well as improving average efficiency of our employee by optimizing the workflow in our daily operations. In the first quarter of 2022, excluding the increase in investments in our digitalization and Yuntong initiatives, our general and administrative expenses decreased by 17.2% year-over-year.

儘管外部挑戰日益嚴峻，我們仍持續實踐專業化、專業化、數位化、開放平台策略，在以下重點工作中穩步推進。一是實現降本增效。我們透過優化人員配置、關閉低效機構、精簡低效網點等嚴格控管成本，透過優化日常營運流程來提高員工平均效率。 2022年第一季度，剔除數位化和雲端通專案投資的增加，我們的一般及管理費用較去年同期下降17.2%。

2, further enhancing our capabilities to offer referral of insurance trust and family trust services to mid- to high net worth clients. In the first quarter, we have hosted about [10] Family Office Consultants or FOC training sessions, which focus on educating our sales agents on all-round knowledge related to insurance trust and family trust and completed relevant certification programs for over 1,500 elite sales agents despite those who have facilitated over 100,000 first year premiums annually. We have also organized over 20 customer engagement activities targeting at high net worth customers. As a result of which facilitated such customers to set up insurance trust accounts covering 50 large-ticket insurance policy, contributing more than RMB 32 million of first year premiums in aggregate or RMB 600,000 of first year premiums per policy.

2、進一步提升向中高淨值客戶推薦保險信託及家族信託服務的能力。第一季度，我們舉辦了約[10]場家族辦公室顧問或FOC培訓課程，重點教育我們的銷售代理有關保險信託和家族信託的全方位知識，並為超過1,500名精英銷售代理完成了相關認證計劃儘管那些每年促成超過10萬首年保費的人。我們也針對高淨值客戶舉辦了 20 多項客戶參與活動。協助客戶設立保險信託帳戶，涵蓋50份大額保單，累計繳納首年保費超過3,200萬元，每張保單首年保費超過60萬元。

3, improving the professional skills of our sales teams. In the first quarter, apart from offering FOC training and certification programs, we have also finished establishing the course framework for Family Retirement Planners or FRP, with focus on courses and whole life insurance and annuity products and authorizing FRP lectures. Relevant training and certification programs are expected to roll out across the country in the second quarter. For the second half of 2022, we also plan to start training and certification programs for policy managers, focusing on helping agents to develop the ability to offer policy custody services and enhanced knowledge on protection-type products, including critical illness products, so as to enable agents to transform from experts on insurance products to experts on family-based asset allocation and then to experts on elderly care and legacy management.

3、提升我們銷售團隊的專業技能。一季度，除了提供FOC培訓和認證項目外，我們還完成了家庭退休規劃師（FRP）課程框架的搭建，以課程和終身壽險年金產品為重點，並授權FRP講座。相關培訓和認證課程預計將於第二季在全國推廣。 2022年下半年，我們還計劃啟動保單管理人員的培訓和認證項目，重點幫助代理人培養保單託管服務能力，增強對包括重疾產品在內的保障型產品的了解，從而使代理人從保險產品專家轉變為家庭資產配置專家，再轉變為養老和遺產管理專家。

Fourth, recruiting high-performing elites. For existing sales force, we have been carrying out the Huacai plan for recruiting industry lead entrepreneurs together with their own sales teams. Over 500 elites as well as their teams have become part of Fanhua since 2021 and contributed approximately RMB 45 million of first year premiums in the first quarter of 2022, representing a strong power for Fanhua's business growth. For the Yuntong business unit, the recruitment of Yuntong advisors and financial planners has gone smoothly despite high standards and performance requirements we applied. As of the end of the first quarter, we had over 410 Yuntong advisors and financial planners, contributing approximately RMB 15 million of first year premiums with per capita productivity of about RMB 40,000.

四是引進高素質人才。對於現有的銷售隊伍，我們一直在實施華才計劃，招募行業領導者企業家和他們自己的銷售團隊。自2021年起，已有超過500名菁英人士及其團隊加入泛華，並於2022年第一季貢獻首年保費約4,500萬元人民幣，為泛華業務成長提供了強勁動力。對於雲通事業部來說，儘管我們提出了很高的標準和績效要求，但雲端通顧問和理財師的招募還是很順利。截至第一季末，雲通顧問、理財師人數超過410人，貢獻首年保費約1,500萬元，人均生產力約4萬元。

5, finalizing the preparation for the launch of Lan Zhanggui APP Version 3.0 on May 20, 2022. We have worked to upgrade Lan Zhanggui from an insurance transaction-focused platform to a one-stop digital operation platform, making trading and services smarter, smoother and more convenience. 6, working on establishing standard operating procedures featuring the 3R, i.e., Account Responsibility, Solution Responsibility and Fulfill Responsibility marketing model of platform supported teamwork to enable our agents to provide more professional and all-around services to their clients. 7, accelerating market development of our open platform strategy. In the first quarter of 2022, first year premiums facilitated on Fanhua's RONS open platform reached about RMB 40 million, up by 62.3% quarter-over-quarter and have shown an ever stronger momentum month by month.

5.完成2022年5月20日藍掌櫃APP 3.0版上線準備工作，致力於將藍掌櫃從以保險交易為主的平台升級為一站式數位化營運平台，讓交易和服務更智能、更順暢以及更多便利。 6、致力於建立以3R為特色的標準作業流程，即帳戶責任、解決方案責任、履行責任的平台支援團隊合作的行銷模式，使代理商能夠為客戶提供更專業、更全面的服務。 7.加快開放平台策略的市場開拓。 2022年第一季，泛華RONS開放平台促成首年保費約4,000萬元，季增62.3%，呈現逐月強勁動能。

We still face tremendous challenges in the second quarter of 2022. COVID-19 continues to adversely affect the offline activities of our sales agents. Meanwhile, the regulatory requirement for a double recording is set to be implemented in Hebei province and other areas starting from June, expected to temporarily impact the whole industry across the board, including Fanhua. Despite these headwinds, the management team is so confident in making operating profit in the second quarter of 2022.

2022 年第二季我們仍面臨巨大挑戰。COVID-19 繼續對我們銷售代理商的線下活動產生不利影響。同時，河北省等地區將於6月起實施雙備案監管要求，預計將對包括泛華在內的全產業產生暫時性影響。儘管有這些不利因素，管理團隊仍對 2022 年第二季實現營業利潤充滿信心。

[Interpreted] Hello, everyone. This is Yinan Hu. And now I would like to announce the dividend plan for 2022. Fanhua announced on May 26, 2022, that it will distribute 4.71 CNFinance ordinary share to the holder of each 20 Fanhua ordinary shares. This is also equivalent to 0.2355 CN Finance ADS for every 1 ADS of the company held. The dividend is payable on or around June 28, 2022, to shareholders of record on June 9, 2022. Based on the market value of CNFinance as of May 26, 2022, the value of the stock dividend amounts to approximately $31.4 million, equivalent to $0.58 per Fanhua ADS, close to the total amount of the cash dividends that we paid in 2021.

【解讀】大家好。這是胡一男。現公佈2022年分紅方案。泛華於2022年5月26日發佈公告稱，向每20股泛華普通股股東派發現金普通股4.71股。這也相當於該公司每持有 1 份 ADS 即可獲得 0.2355 CN Finance ADS。該股將於 2022 年 6 月 28 日或前後支付給 2022 年 6 月 9 日登記在冊的股東。根據 CNFinance 截至 2022 年 5 月 26 日的市值，股票股息的價值約為 3,140 萬美元，相當於每份泛華ADS為0.58美元，接近我們2021年支付的現金股利總額。

This concludes our presentation. And now the floor will open for your questions.

我們的演講到此結束。現在請大家提問。

Hello, Dave, we are ready for questions.

你好，戴夫，我們準備好回答問題了。

(Operator Instructions) I show our first question comes from the line of Zixian Wang from CICC.

（操作員說明）我顯示我們的第一個問題來自中金公司的王子賢。

[Interpreted] The first question is about the saving product. So, could you share us with the Q1 numbers and the future of local saving products as well as the commission rate that we give to the agent and collect from the interest company. So, it may help us to estimate the brokerage income? And the next question is, do we have full year guidance in terms of like [APE], revenue or operating revenue? That's all my question.

【解讀】第一個問題是關於節能產品的。那麼，您能否與我們分享第一季的數據和本地儲蓄產品的未來，以及我們向代理商提供的佣金率以及從利息公司收取的佣金率。那麼，它可以幫助我們估算經紀收入嗎？下一個問題是，我們是否有 [APE]、收入或營業收入等方面的全年指引？這就是我的全部問題。

[Interpreted] I think your question can be divided into 3 small questions. For the first part, which is the sales of our savings product in the first quarter of this year. Compared to the same period last year, the first year premium of our savings product is flattish year-over-year. However, the percentage as of total amount of first premium is actually higher than the previous quarter and the previous year, mainly due to the high base in the first quarter of last year due to the [strong] sales of critical illness products prior to the transition to the new critical illness definition framework. As for the changes in market demand, we are observing a trend in customer demand transiting from the critical illness to products that can cater to their needs for elderly care and legacy management. So, we believe that the growth momentum of savings products will continue in the coming 4 quarters.

[解讀]我覺得你的問題可以分為3個小問題。第一部分是我們今年第一季儲蓄產品的銷售情況。與去年同期相比，我們的儲蓄產品首年保費較去年同期持平。但首付保費佔總金額的比例實際上高於上季和上年，主要是由於去年第一季重疾產品銷售強勁導致去年第一季基數較高。過渡到新的危重疾病定義框架。從市場需求的變化來看，我們觀察到客戶的需求有一個趨勢，就是從重症疾病轉向滿足養老、遺產管理需求的產品。因此，我們認為未來四個季度儲蓄產品的成長動能將持續。

As for the commission rate for the savings products, for insurance intermediaries, our commissions or commission income consists of those first year commission and renewal commissions. And there are 2 basic characteristics of savings products, which is large -- the per policy amount is large, while the renewal terms are relatively short. So, the total amount of commissions is actually lower -- has actually declined. Since last year, we have observed that the conversion rate between first year premium and APE is actually declining. And the conversion rate has dropped to roughly 30%. And so we are trying to making efforts to improve the conversion rate by means of improving our product structure as well as the [weight] of selling to extend the renewal periods or renewal terms of the product that we sell to improve -- so that to improve the conversion ratio.

至於儲蓄產品的佣金率，對於保險中介來說，我們的佣金或佣金收入包括第一年佣金和續約佣金。而儲蓄產品有兩個基本特點，一是大，單單保額大，而續保期限相對較短。因此，佣金總額實際上較低——實際上已經下降。從去年開始，我們觀察到首年保費和APE之間的轉換率實際上是在下降的。而且轉換率已經下降到30%左右。所以我們正在努力提高轉換率，透過改善我們的產品結構以及銷售的[權重]來延長我們銷售的產品的續約週期或續約期限來改善——這樣提高轉換率。

As for the full year guidance, we are actually faced a lot of our external macro environment uncertainties, which makes this difficult to give an accurate position of the business outlook going forward. Particularly, we -- due to the COVID-19, we don't know the impact, the magnitude of the impact on our business yet. And right now, so far, we haven't seen any signs of this in terms of the COVID-19 impact, particularly in the second and the third tier cities where the COVID-19 control measures, the restriction measures is relatively stricter than the first tier cities. We hope that by the second quarter, we can have a better -- we can have a better idea of our future outlook. However, internally, on our operational wise, we are actually seeing sequential improvement in our operating matches, particularly the continued improvement in the productivity of high-performing agents. Thank you.

至於全年指引，我們實際上面臨著許多外部宏觀環境的不確定性，這使得我們很難對未來的業務前景做出準確的定位。特別是，由於 COVID-19，我們還不知道其影響以及對我們業務的影響程度。目前，到目前為止，我們還沒有看到任何關於COVID-19影響的跡象，特別是在二、三線城市，那裡的COVID-19控制措施，限制措施相對比其他城市更嚴格一線城市。我們希望到第二季度，我們能夠更好地了解我們的未來前景。然而，在內部，在我們的營運方面，我們實際上看到我們的營運匹配不斷改善，特別是高績效代理商的生產力持續提高。謝謝。

Hi, Zixian, do you have another question?

嗨，紫賢，你還有問題嗎？

[Interpreted] And so they [drafted up] their new sales regulation, limited the commission rate and also mentioned to restart the exam for agents. So, can we evaluate the influence of this new policy to our sales force and the future commission income?

【解讀】所以他們就制定了新的銷售規定，限制了佣金比例，也提到要重啟代理商考試。那麼，我們能否評估一下這個新政策對我們銷售團隊以及未來佣金收入的影響呢？

[Interpreted] The draft measures, I think the purpose is to curb the e-regularities in the industry and to promote a healthy development in the longer term of the insurance industries, so we totally welcome the implementation of these measures. And it also aligns with our business philosophy since we are here for the long term. And we believe that the new measures will be helpful to protect the interest of both the consumers and insurance companies and all the other participants in the value chain. So, a reasonable or healthy interest spread between different part of the value trend is helpful for a sustainable development of the industry.

【解讀】這個措施草案，我認為目的是為了遏制產業的電子化違規行為，促進保險業更長遠的健康發展，所以我們非常歡迎這些措施的實施。這也符合我們的經營理念，因為我們是長期存在的。我們相信，新措施將有助於保護消費者和保險公司以及價值鏈中所有其他參與者的利益。因此，價值趨勢不同部分之間合理或健康的利差有利於產業的永續發展。

We totally object the idea to compete for market share by increasing the commission rate. Instead, we believe that we should provide better services to customers and offer better products so to compete to get market share. And we also observe that from our own statistics that our high-performing agents actually have increased their commission income, not because of the increase in commission ratio, but instead because of the productivity increase. So -- and all our initiatives, the results also showing this continued trend. Thank you.

我們完全反對透過提高佣金率來爭奪市場份額的想法。相反，我們認為我們應該為客戶提供更好的服務，提供更好的產品，從而爭取市場份額。而且我們也從我們自己的統計數據中觀察到，我們的高績效代理商的佣金收入實際上有所增加，並不是因為佣金比例的提高，而是因為生產力的提高。因此，我們所有的舉措、結果也顯示出這種持續的趨勢。謝謝。

Hi, Dave.

嗨，戴夫。

Thank you. I show no further questions in the queue at this time. I'd like to turn the call back over to you, Ms. Qiu for closing remarks.

謝謝。目前我在隊列中沒有顯示任何其他問題。我想把電話轉回給邱女士，讓您致閉幕詞。

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

感謝您參加今天的電話會議。如果您還有任何疑問，請隨時與我們聯繫。謝謝。

This concludes today's conference call. Thank you for attending. You may now disconnect.

今天的電話會議到此結束。感謝您的出席。您現在可以斷開連線。

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

[本文字記錄中標記為[已翻譯]的部分是由現場通話中的口譯員朗讀的。]