Thank you for standing by for Fanhua's Fourth Quarter and Fiscal Year 2023 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. [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 the Events and Webcast section. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the meeting over to your host for today's conference, Ms. Oasis Qiu, Fanhua's Investor Relations Manager.

Thank you, Andrew. Good morning and good evening, everyone. Welcome to Fanhua's fourth quarter and fiscal 2023 earnings call. A replay will be available on our IR website after today's call. 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. These statements are made based on management's current expectations and beliefs concerning future events impacting the Company and therefore, 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 its forward-looking information, except as required under applicable law. Joining us today are our Vice Chairman and Chief Executive Officer, Mr. Yinan Hu; Chief Financial Officer Mr. Peng Ge; Chief Strategy Officer, Mr. Ben Lin; and Chief Operating Officer Mr. Liu Lichong. Mr. Hu will start the call by sharing his view on recent market trends and our strategy development, followed by Mr. Ben Lin, who will provide a review of financial and operational highlights and discuss our business outlook going forward. There will be a Q&A session after the prepared remarks. Please note that you can find our presentation material relevant to this call from our official website. With that, I will turn the call over to Mr. Hu. You may begin.

Good morning and good evening. Thank you for joining us on our fourth quarter and full year 2023 earnings call. Reflecting on the past year, 2023 proved to be a year of challenges and transformations for the entire life insurance industry in China. To perform changes in regulatory policies, particularly the downward adjustment of the pricing rate, and implementation of Filing and Actual Fee Consistency requirement in the bancassurance channel presented unprecedented test for the industry. Fanhua was no exception. However, it was precisely within this challenging landscape [ph] that we showcase resilience and achieved stable growth. In the full year of 2023, we achieved a total insurance premiums of RMB16.4 billion representing a 28.7% year-on-year growth, continues to outpace the overall industry growth. First year premiums reached RMB3.8 billion marking a 30.3% year-on-year growth. Leveraging the efficiency gains from digitalization and robust cost control measures, we realized an operating income of RMB195.8 million, up 16.1% year-on-year. Net income attributable to shareholders reached RMB280.4 million, reflecting a growth of 179.7% year-on-year. This solid performance demonstrates the successful execution of our strategy. Over the past year, we have continually strengthened our strategy of driving growth through Professionalization, Specialization, Digitalization and Open Platform, using a series of pivotal achievements. For instance, we have consistently bolster our pool of top tier agents, enhancing their professional capabilities with the contribution from top performing agents and increased productivity of our sales team at all levels, serving as a pivotal driver ,,,. Our digital platforms have continued to deliver efficiency gains, empowering our insurance advisors, while also providing our customers with superior service experiences. The diversified service ecosystem that we have built has established a solid foundation for our company's differentiation and long-term development. Furthermore, our open platform and M&A model have also emerged as key…

Thank you, Mr. Hu, and thank you, Oasis. Let me just walk you through our results for 2023. Some of the numbers that I'm going to quote, you can find them in our results release as well as our online presentation. Impacted by two significant regulatory policy changes in 2023, specifically, the pricing rate change and commission cap at the bancassurance channel, the life insurance industry in China witnessed a roller coaster ride in terms of premium growth. Starting with single-digit growth in the first quarter, it saw two double-digit growth in the second quarter due to the pull forward demand prior to the pricing rate adjustment. What we saw was then a reversion to single-digit growth in the third quarter, and ultimately negative growth in the fourth quarter. Overall, we saw a 10% year-on-year increase for the entire year of 2023 at the industry level. Amidst the [indiscernible] pressures of sluggish performance on both the liability and investment side, major insurers are expected to experience significant decline in profitability, as indicated by the 15% negative growth and average profit of the listed companies in the first 9 months of 2023. Against this backdrop, Fanhua continues to outperform the industry with stellar performance. In 2023, we achieved RMB16.1 billion in total life insurance premium, which is a 30% increase year-on-year and net income to shareholders reached RMB280 million. up almost 180% year-on-year. Overall, we're very pleased with our financial results, given the backdrop of a challenging macro and insurance industry environment in 2023. More importantly, we are particularly proud of the strategic executions we have carried out to achieve these results. Throughout 2023, we successfully executed each strategic initiative as we had planned. We firmly believe that these strategic achievements will set us on a higher quality and sustainable growth…

Thank you. Now the floor opens for Q&A session. Andrew?

[Operator Instructions] And our first question comes from the line of Yuyu Zhang with CICC. Your line is open.

So my first question is about [indiscernible] made a lot of discussions before [indiscernible] be a little bit more precise on this? Beyond your observation, to what extend made a commission revenue [indiscernible] if you're adding numbers you can share with us. My second question is for the overseas business. Could you share some more details on what you've done in 2023 and [indiscernible] 2024 and about my group, how can someone cooperate with you to achieve more market share in Asia? Thank you very much.

Mr. Hu would like to invite our Chief Operating Officer Mr. Liu to take your first question. And the second question actually consists of two parts. So first of all, regarding our national initiative, especially the business in Hong Kong, that this part will be answered by Mr. Ben Lin, our Chief Strategy Officer and the last regarding our potential collaboration with White Group, Mr. Hu, he will answer the question.

So, the requirements for the reported and fire fee consistency in the independent brokers channel is up and coming. Although the regulatory body has not yet given specific timing as to when they will be implemented, but the rumors in the industry is that it will probably be implemented in April. And as for the extent of the commission cap, there is also no specific guidance from the regulatory body yet, but -- and the consensus among a lot of insurance companies that probably the commission rates for the same type of products, the commission rate will probably be down by 30% to 40%. While it's for certain that the business for insurance, independent insurance brokers will be severely impacted, but why now, the insurance companies will have a different product strategy to adapt to this market change, diverting their focus from the whole life insurance product to participating insurance products to make up some of the loss on the commission income for independent brokers. The requirements for commission cap and the reported five be consistency. It's inevitable trend, given the continued decline in interest rates. However, NA will probably bring a short-term path to industry as well for Fanhua, but we are fully prepared for this new changes. And we have also been expanding our platform models. We believe that this regulatory change will result in more small and medium sized insurance intermediate companies to [indiscernible] elaborate, with Fanhua in terms of platform business. And it will help us to continue to drive out market share. Thank you.

Okay. I'll answer the first part of the second question with regard to progress in the Hong Kong market. So we established the two joint ventures with our partner Asia insurance back in late October. So it's been about 5 months. And I'm very pleased to say that we have made very, very significant progress with our two joint ventures. Firstly, in terms of our team setup and office, so we now basically have two offices in Hong Kong. One is our brokerage business and the other one is our technology business. In our brokerage business, we have now built a team of 13 members there, basically, in the administration, in the technical representative areas to facilitate contract signing. In the period of November to January together with the management team from Asia insurance, we met with all the major life insurance in Hong Kong to start the process of contract signing. So far, we have signed contract with 10 insurers. And over the last few weeks, we have received the commission schedule forms, some of the insurers. So very, very pleased to say that we can officially commence business from this week. In terms of where we differentiate in Hong Kong and why we are confident that we can be successful. In our first market of Hong Kong, I think it comes down to really two things. Firstly, we're the only broker in Hong Kong, in the region that's backed by two listed companies with abundant resources. And this provides us with abundant opportunity and capability to offer comprehensive services to our customers. Secondly is on the technology front. As you know, I've highlighted in the past, the broker technology segment in Asia remains very, very underdeveloped. Even in mature markets like Hong Kong, a lot of the contract…

So, first and foremost, what we want to reiterate is that our collaboration will not change the positioning of Fanhua and our strategic direction. Last year, we basically issued our new mission statement for the company. And we made it very clear that our objective going forward is to become the regional service provider for family services, broadening our capability beyond insurance, but into education, retirement, et cetera. So we're advocating is insurance -- a insurance plus model beyond Mainland China. And we think the business [indiscernible] opportunity to have a visit at White Group is very, very timely for us. So the synergy that can bring about what our cooperation White Group is really based on to upgrade in terms of our capability. The first one is that the White -- Singapore's White Group have much better capability in terms of capital raising, particularly in the international market compared to Fanhua. Secondly, is that their track record and capability in mergers and acquisitions is also very evident. Given the history and success, we think these two capabilities serves as important upgrades for Fanhua as we pursue our strategy of going global through organic and inorganic strategies. M&A will be a core part of our strategy, because we think that the opportunity for consolidation in the market not only in China, but across the region is very, very significant. And really we'll focus on two areas. Number one is all our mergers and acquisitions will focus on bringing capabilities to improve, or help us execute on our strategy of developing a professional sales team across the region. And then secondly, is helping us to broaden our services to high net worth clients. So without a doubt, the biggest change to our industry from 2024 onwards, is the commission cap. And we think, if we look at the regulatory purpose of the commission cap is really to drive higher quality growth. Now how do you achieve that? We think, at the end it comes down to upgrading your capability, that can be very, very important. So, we think the commission cap is the right thing for the industry, we fully embrace it. And our strategy is on basically putting the resources on improving our capability, so that in this environment we will become the biggest beneficiary. Thank you.

I'm showing no further questions at this time. So with that, I hand the call back over to Oasis Qiu for any closing remarks.

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

Thank you for participating. This concludes today's program, and you may now disconnect.