Ladies and gentlemen, thank you for standing by, and welcome to Huize Holding Limited’s Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions] Today’s conference call is being recorded, and a webcast replay will be available. Please visit Huize’s IR website ir.huize.com, under the Events and Webcasts section. Now, I’d like to hand the conference over to your speaker host today, Ms. Harriet Hu, Huize’s Investor Relations Director. Please go ahead, Harriet.

Thank you, operator. Hello, everyone, and welcome to our earnings conference call for the fourth quarter and full year of 2020. Our financial and operating results were released earlier today and are currently available on both our IR website and the Newswire. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements. Please also note that the use of non-GAAP measures today, which are more thoroughly explained in our earnings release and filings with the SEC. Joining us today are our Founder and CEO, Mr. Cunjun Ma; COO, Mr. Li Jiang; Co-CFO, Mr. Minghan Xiao; and Co-CFO, Mr. Ronald Tam. Mr. Ma will start the call by providing an overview of the company’s performance and operational highlights for the fourth quarter of 2020. Mr. Tam will then provide details on the financial results for the period before we open up the call for questions. I will now turn the call over to Mr. Ma.

[Foreign Language]

Hello, everyone, and thank you all for joining Huize’s Fourth quarter and Full Year 2020 Earnings Conference Call. 2020 marked an important milestone for Huize. We are officially listed on NASDAQ despite a challenging capital market condition, due to our Huize as 1 of the pioneers in China’s online insurance industry. In February, the pandemic was at its work in China. And it was not an easy task for us to complete our IPO. Therefore, I would like to express my gratitude to all shareholders and investors for your support and trust. Despite the uncertain macro conditions throughout the year, we delivered robust results due to our years of experience in the insurance industry, the competitive advantages of our online platform business model, unique focus on long-term insurance product distribution and our leading digital development capabilities. During the year, total GWP facilitated on our platform increased by 50% year-over-year to RMB 3 billion, while total operating revenue increased by 22.8% year-over-year to RMB 1.22 billion. Particularly in the fourth quarter, we capitalized on the recovery trends in the industry and overall economy, with both total GWP and total operating revenue increasing by more than 50% year-over-year, to reaching new quarterly highs. On the business strategy front, Huize pursued the long-term development of user value in place of short-term traffic monetization. Our differentiated long-term insurance product strategy enhanced our resilience during the market downturn and generate sustainable growth momentum. In 2020, long-term life and health GWP accounted for 93.4% of total GWP, increasing from 87.4% in 2019. Meanwhile, GWP for long-term health insurance increased by 50.6% year-over-year to RMB 2.14 billion. Over the past 3 consecutive quarters, persistency ratios for long-term life and health insurance in the 13 and 26 months have remained about 94%. We believe that Huize’s capabilities in…

Thank you, Mr. Ma and Harriet, and hello, everyone. It’s Ron here. In summary, we are very excited to report yet another strong set of results for the fourth quarter, in which we have delivered record quarterly numbers again for both total GWP facilitated on our platform as well as total operating revenues, which has beaten our previous guidance given to the market. For the first time in the single quarter, we managed to facilitate over RMB 1 billion in first EM renewal premiums. The corresponding strong top line performance continues to reflect importantly, the underlying recovery trend in Chinese insurance industry following a containment of COVID in the country as well as the increasing adoption of online purchases of insurance products are key target customers, which is represented by a new generation of young mass affluent consumers from the high-tier cities in China. From a product perspective, our key focus in critical illness products particularly co-developed products with our insurer partners, continue to drive a large part of the GWP growth in the long-term health segment of the business. With total GWP contribution of RMB 589 million in the quarter, which is up 61% year-over-year. Mr. Ma earlier mentioned Darwin 3 earlier in his prepared remarks, which we co-developed together with Sinatay Life Insurance was the best-selling critical illness product during the quarter. And we continue to see a strong momentum being carried into the new year for Q1 of 2021, ahead of the transition to the new critical illness definition regime for the overall industry. In addition to critical illness, we have also successfully ramped up distribution of savings insurance products, including annuities as well as whole life insurance during the quarter, which amounted to a first year GWP of RMB 228 million during the quarter, as we…

[Operator Instructions] Your first question comes from the line of Michelle Ma of Citigroup.

[Foreign Language] My first question was about the new critical illness product and the new definition of critical illness. And how the prices of new products compared to the old version? Is it still very competitive? And how are the overall sales in February? And the second question is about some new regulations, which will be implemented this year and the next year on February 1, May 1 and January 1 next year. What are the biggest challenges management see to be comply with these new regulations?

Thank you, Michelle. It’s Ron here. Let me take the questions for the team. So the first question regarding the new critical illness product. I think it’s very early to say, given that we have just launched the new Darwin #5 literally today, so results are still yet to be seen. But we believe that the new product, obviously, we would like to say that given that this is another intuition of the product. And again, this time, we are working with Sinatay Life Insurance. We believe that the new products should be able to drive sales, probably in the second half of this year. And for any new product to be coming online, it would require a period of marketing and education for the insurance clients at large through our direct channels and also through our -- through the marketing channels. So I think it’s still very early days to tell. But we are obviously very confident that the new definition product would also be very well received by the market. So the strong numbers that we have previewed for Q1 is mainly coming from the old definition product, which we -- early in the prepared remarks. We commented that the slower demand coming from Q4 into Q1, especially given the deadline of January 31 for both of the products in the market, we see a significant demand in that month of January. So that’s really the answer to the first question. And to the second question regarding regulatory changes, I would say that given where we are in the industry as 1 of the leading operators, we are in very constant dialogue with the regulators. And in actual fact, we are 1 of the consultative members on the Board of the relevant regulatory bodies in terms of coming…

Your next question comes from the line of Joey Yang of CLSA.

[Foreign Language] So my first question is about the products. So we understood that the Darwin #5 officially launched today. And we also understood that with AI platform that sells out the products that are not customized. So could management help us understand the difference between the 2 types of products, which 1 could offer us a better profit margin? And is there a preference between the 2 types of products? So my second question is about the take rate in 4Q. We noticed that there was a slight decrease in 4Q compared with previous quarters. And at the same time, we also see that the structure of the premium -- the first year premium actually accounted for like 60% of the 4Q premium. So I was wondering what’s the driver of the decreasing take rate in 4Q? Is it because of selling of more short-term insurance products? And my last question is related to the off-line services centers, as Mr. Ma has mentioned, I would like to ask about the latest progress of this offline services development. And also about what’s the selling point or was our -- we obtain to attract the talented -- the talent employee to our offline servicing centers?

[Foreign Language] Thank you, Joey. Thanks for following us and for your questions. Why don’t I take the questions on behalf of the team again. So the first question is really about the product mix of our GWP and whether we have any preference towards customized or co-developed products versus the standard product that we can take off the shelf like other brokers. I think the clear answer here is that, first of all, I think that we always come from the customers perspective. The first, which for is the best suitable product for their circumstances. And I think typically, when users come to our platform, they’re being attracted by the very good valuable money, critical illness product that we are codeveloping with our insurance company partners. And therefore, the answer to this question naturally would be that we have a slight preference towards the customized or co-developed products that we co-manufacture with like Sinatay and the likes of Huize Med Health, because oftentimes, these products represent the best value for money products currently available at any given point in time in the marketplace. And so naturally, customers will prefer to inquire about these products. And I think from our perspective, as a corporate, we do prefer co-developed products given that we will be able to cultivate and deepen our relationships with our upstream insurance partners, deepening engage with them would, therefore, lead to better economy of arrangements for us down the road. For example, Darwin #5 is the second time that we have worked with Sinatay, and therefore, we will be looking to receive better treatment from the insurance company partners. And I think also the way that we can demonstrate to the overall industry as to our high persistencies, we give a lot of comfort to our insurer…

Your next question comes from the line of Brian Li of AMTD Group.

[Foreign Language] I have noticed that you just had RMB 100 million on the account payable on your balance sheet. So could you please give more color on this item?

Sure. Thanks, Brian, and thanks for joining the call today. I think the simple answer to this is the strong month of December that we have experienced as a business. And therefore, a lot of the business has generated this account payable balance at the end of the year. So it really had to do at the strong month of December from a business perspective.

Your next question comes from the line of Jan Oli of [indiscernible] Securities.

[Foreign Language] So my first question is about the M&A, mentioned by Mr. Ma just now. This year -- this current year, your company are going to acquire 1 more M&A deals? And my question about what’s the potential target? So my second question is still about the offline service center. So what are the main functions of those offline service center?

Okay. Thank you. It’s Ron here. Let me take the first question and maybe for the second question, [Foreign Language]. Okay. So first question about the M&A targets. I think we are prioritizing our investment targets, I think, in 3 major brackets. I think the first major bracket would be possibly some of the existing channel partners that we are working with for the past 3 years. I think some of those could be interesting collaborations from a capital perspective for us to better integrate into these distribution and marketing channels. So that’s 1 area. Second area is similar online or even offline brokerages. This will be very synergistic to our core business. For online, brokerage would be a horizontal expansion for us and to capture better market share. For offline will be a complementary business strategy for online business so that we can accelerate the treatment of an online to offline business model. So I think those 2 could be the key focus for us. And the third area could be other insure tech platforms. Platforms have innovative technologies in the business processes, whether it be the front end, and just AR customer service or the middle to back-end where they have very strong technologies in terms of customer service and online support, and also underwriting and claims product and so forth. So I think this will be the major M&A target areas for us to be looking at.

[Foreign Language]

[Foreign Language] Thank you. That’s Mr. Ma commenting on the second question, and I’d like to translate here for the team. So the second question relating to the key strategy for the offline centers plant that we just mentioned. I think we’re echoing the points that we have made earlier, I think we are really trying to leverage on the core online platform that Huize has did over the last 15 years to more efficiently serve differentiated high-value customers for existing use of Huize. Because given we have the internal data on all our customers, we are able to extract a segment of a high-value customers for us to initially focus at serving higher-value products to this products as well as customer segment. And given that we’re still in the initial testing phase or rolling out pace of this business plan, I think we would like the market to give us time, and we will be keeping the Investor Days updated in our subsequent calls as to the progress of this new offline business plan.

[Operator Instructions] Your next question comes from the line of C.C. Wang [ph] of Independence Investment.

[Foreign Language] Hello, can you hear me?

Yes.

Okay. Thank you. [Foreign Language] We understand that Huize leverage itself to tap into new users and meeting customers. But since that with the brand itself as online insurance aggregator, it’s not well-known to end users till now. Do you have anything to enhance the brand agreement to our holding? So Huize has achieved a record high financial performance, and although there was a surge of price before the recent downturn. But I think that Huize still remain a low profile to overseas investors. For example, comparing to a U.S. company eliminate a similar insurance tech company that it has only CNY 60,000 revenue. Its market cap is already like CNY 50 billion. Does Huize have any plan to lease up investors awareness and exposure to adjust the cap estimation?

Thank you. It’s Ron here. I’ll take these questions for the team. And for the first question on our overall brand recognition in the market, I think we have been around for 15 years. And I think that the proud thing that we like to say about our company is that we have built on very limited capital support over the years before the IPO, on a very stringent budget, we have been able to build up this platform to where it is today. And we have been very stringy on spending on our brand advertising or marketing in the consumer space. And therefore, I think that the business model that we have devised and the way that we can leverage on social media channels as our partners has really scaled the business to where it is today and has enabled us to achieve ultimately a listing in the U.S. market. I think this itself is a very big achievement. So we -- obviously, there’s still a lot of work to be done, and we recognize that we can do a lot more on the branding side. And in the new year of 2021, I think we are now earmarking more and more funds in terms of really building up a bigger brand presence in the consumer market as well as the capital markets. So that’s the answer to the first question. And for the second question, I think that the reason why, I guess, we have been a bit under the radar over the last year has a couple of external factors at the play as well. I think when we relisted, we were very much hit by the unfortunate timing of COVID-19 at this outbreak, and we were actually the first Chinese IPO to get done after COVID…

As there are no further questions at this time, I’d like to hand the conference back to our management for closing remarks.

Okay. Thank you very much, everyone, for joining this call, and appreciate the strong participation, and we look forward to the next call for the second quarter -- first quarter of 2021. Thank you very much.

Thank you for joining us today. Thank you.

Thank you.

Ladies and gentlemen, this does conclude our conference for today. Thank you for participating. You may now all disconnect.