Thank you for standing by for Fanhua’s Second Quarter and first half 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent background noise. After the management’s prepared remarks, there will be a question-and-answer session. Please follow the instructions given at that time if you would like to ask a question. For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within three hours after the conference is finished. Please visit Fanhua’s IR Website at ir.fanhuaholdings.com under the Events & Webcasts section. Today’s conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today’s conference, Miss. Oasis Qiu, Fanhua’s Investor Relations Manager.

Good morning. Welcome to our second quarter 2018 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 United States 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 applicable law. Joining us today are our Chief Executive Officer, Mr. Chunlin Wang; Chief Financial Officer, Mr. Peng Ge and Board Secretary, Lily Lee [ph]. Mr. Wang will walk you through our financial results in the second quarter of 2018. And He, Mr Ge and Ms Lee [ph] will take your questions after the prepared remarks. Now, I will turn the call over to Mr. Wang.

Thank you for joining us on today’s conference call. Here with me, we have our Chief Financial Officer, Mr. Peng Ge and our Board Secretary, Mrs. Lily Lee. We will begin today’s call with a review of our second quarter 2018 financial results and the progress that we’ve made during the quarter, followed by a brief discussion of our business outlook for the second half of 2018. Then we will have a Q&A session after the report. In the second quarter of 2018 the central government’s increased efforts to deleverage and rectify market disorders so as to content [ph] initial risk. In the meantime, insurance regulators continue its drive to speed industry back to its primary growth of providing long term protection to consumers. Amid this backdrop new policy sales for most life insurance companies dropped year-over-year as the growth in the number of sales agents in the industry detonated while consumers were held back buying on expectation for more meaningful improvement in product designed for annuity and participating insurance products in the coming quarters. As far as Fanhua is concerned, in the second quarter of 2018, we continue to report strong results, with operating income growing by 77.2% year-over-year to RMB127.6 million beating our previous guidance of RMB100 million and that income attributable to shareholders growing by 22.4% year-over-year to RMB171.8 million. The earnings per ADS grew by 20% year-over-year. The stellar growth of operating income was mainly due to the faster than expected growth and new policy sales for life insurance products and the increasing contribution from renewal business, which generates higher gross margin than new business. Now let’s look at our life insurance business segments. During the second quarter of 2018, our life insurance segment posted strong performance across all of the key operational metrics. Total life…

Ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions] Your first question comes from the line of Arthur Hall from Halco Incorporated. Please ask your question.

Yes, and congratulations on an excellent quarter. Since health insurance is such an important part of your business, could you give more information on the type of insurance? Is there a death benefit in the insurance? What's the duration of the insurance and the renewal rates and the approximate operating margin on the health insurance? Thank you.

The types of health insurance product that we sell are mainly critical illness products. and duration is mainly in the range of like mostly a 20 years. And the gross margin for the first year commission is about 26%, and the gross margin for the renewal commissions is about 60%. So the average, the combined average is about 30%. Thank you.

Okay. Thank you.

Your next question comes from the line of Dan Tian from CICC. Please ask you questions.

There are two questions from Tian Dan. And the first question is that, our first year premiums and the renewal premiums grew by 70% year-over-year, while the revenues for our life insurance products only grew by 37%, and the gross profits from life insurance business also only increased by 19%. He is wondering what's the reason that the revenues growth was outpaced by premium growth? And the second question is about the progress of our 521 Development Plan?

Our first year premiums for life insurance products grew by 41.4% and the renewal premiums grew by 109%, so the combined total life insurance premium increased by 69% -- roughly 70%. And for the renewal business the commission rates is about 17% on average. And while we mentioned before the first year premium is about 122%. So I think one of the reasons that our revenues growth was lower than the premium growth. And the reason that the gross margin growth was lower than the premium growth, because we recognized a performance bonus half quarter to half quarter performance bonus of RMB30 million which increase the gross profits for our life insurance business late year, the same period last year. And the performance bonus was basically calculated on the combined sales volumes of our sales agents and the payment of such kind of performance bonus was not in a fix – was based on fixed timing. So last year the performance bonus was recognized in the second quarter and for this year it's possible that we may have similar kind of performance bonus in the third quarter. Since we announced the plan to the capital market and all members of the company on June 14, we organized a meeting attended by all the [Indiscernible] agency subsidiaries and branches to give full accounts of all details about the 521 Development Plan and to hit the subscription process. As of date, the number of applicants for participating in the plan has exceeded 2300 persons. We expect the whole transactions to be completed by year end. Thank you.

[Operator Instructions] Your next question comes from the line of Leon Lu [ph] from ALS [Indiscernible] Management. Please ask your questions.

There are two questions. The first question is regarding our next quarter guidance. Well, the guidance that we provided for the next quarter is slightly lower than the second quarter; just wondering what's the reason? Is it because we expect that the business growth was low down or is it because of the change in business mix? And the second question is about management’s view -- what's the management view about growth outlook for next year?

Last year actually we have created record high sales because of the product ban on the fast return type of annuity and universal products in October, 2017. So based on this high base, and we expect that this is possible that our first year premiums may decline year-over-year and that’s just the base that we predict our profit guidance. And as for the business structure, we believe that it will remain more or less the same with health insurance still be major products contribution. It was because we do expect that the premiums volume may also be lower than the second quarter. But we do expect that our business and profits will bounce back up in the fourth quarter. So basically the seasonality in this year would be a quite a stark contrast to that in 2017. As for the outlook for 2019, firstly for 2018 we had mentioned in the prepared remarks that we are confident to achieve positive growth in first year premiums and increase our operating profit guidance from 40% to 50%, but for the industry we do think that it will be a year of corrections, year of adjustment for the industry in 2018. And however after the adjustment in 2018 we've seen that the industry will resume profit growth in 2019 and after. We remain confident about the growth outlook for 2019. Thank you.

There are no further questions at this time. Presenters, please continue.

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