Ladies and gentlemen, thank you for standing by and welcome to Huize Holding Limited Third Quarter 2021 Earnings Conference Call. At this time all participants are in listen-only mode. After management's prepared remarks, we will have a question-and-answer session. Today's conference call is being recorded and a webcast replay will be available. Please visit Huize's IR website at ir.huize.com under the Event and Webcast section. I would now like to hand the conference over to your speaker host, 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 third quarter of 2021. 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 the 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 we will discuss 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 third quarter of 2021. 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 for joining Huize's third quarter 2021 earnings conference call. The lingering effects from the ongoing pandemic, challenging macroeconomic environment and weakness in consumer confidence has continued to impact the growth momentum in insurance product demand and consumption throughout the industry in the third quarter. We have proactively adjusted our business strategy accordingly in response to the difficult industry dynamics and have benefited from our digitally driven business model, consistent product innovation and ability to acquire and service a high quality user base via our omnichannel distribution platform. Despite the overall weak operating environment in our industry, we continued to deliver solid results in the third quarter. Total gross written premiums facilitated on our platform increased by 24% year-over-year to RMB966 million while total revenue was RMB315 million in the third quarter reflecting steady improvement in our business and validation of our execution strategy. [Foreign Language] As we continue to grow our user base, our users' profiles remain young with a high lifetime value and strong stickiness. In the third quarter, roughly 65.6% of our long-term insurance customers were from higher tier cities with an average age of 35.2 years old. We have proactively adjusted our business strategy to increase the contribution from savings products and our overall average ticket size. In terms of first year premiums, the average ticket size of our long-term insurance product increased by 74.6% to RMB 6,684 in the third quarter while the average ticket size of our savings product increased from RMB 25,000 in the second quarter to RMB 35,000 in the third quarter. The repeat purchase rate of our long-term insurance product and saving product was 28.4% and 29% in the third quarter respectively. As of August, our persistency ratios for long-term life and health insurance in…

Thank you, Mr. Ma and Harriet. Good evening, everyone. For the purpose of this call, I think I would like to quickly just recap and summarize a few key highlights and takeaways from this quarter’s operating results. And for the financial line items discussions, I would like to kindly refer the audience to our uploaded earnings release for full details. Overall, I think we are very pleased to deliver a set of robust operating performance in light of the very challenging macroeconomic and industry environment and obviously amidst the ongoing tightening regulatory regime for the online insurance industry. For the quarter we were still able to achieve strong double-digit growth in FYP of 42.7%, which is attributable to our very early anticipation of expected weakness in market demand for traditional protection type insurance products. And so since the second quarter of this year, we have strategically focused our management resources in scaling up the distribution of savings insurance products to more than compensate for the shortfall in long-term critical illness products demand in the market. Our strong growth in savings product FYP as we have demonstrated since the second quarter is a direct result of the customer insights that is provided to ourselves by the platform’s data analytics and the agility of our platform business model to adapt and respond to changes in the market and industry dynamics. And more importantly, it is also a result of the successful product co-development and marketing of long-term endowment life insurance and annuity products with our insurer partners in a relatively accelerated time frame, which again itself is a testament to our product development capability, our deep engagement and our strong relationship with our insurance partners. Another highlight with respect to our strong growth in savings insurance products this quarter is that it…

Certainly [Operator Instructions] Thank you. Your first question comes from the line of Michelle Ma from Citi. Please go ahead.

[Foreign Language] My first question is regarding to the upcoming Internet life insurance regulation where we will see a lot of moving parts regarding to products available, insurance institution partners we can work together. So from your perspective, how does industry landscape change and how is the market position of Huize? And the second question is more about the expense control exercise we mentioned previously. So could you give us any color on the headcount for next year, any guidance? Thank you.

[Foreign Language]

Thank you, Mr. Ma. Let me translate here very quickly for the audience. So the question is relating to the impact of the recently announced regulatory changes to the online life insurance market and how that would affect our business and also the expected cost control measures or any relevant guidance that we can give to the market. So the response was that obviously the regulatory changes will have a very meaningful impact on the overall industry, ourselves being included. But we obviously have been operating in the insurance industry for 15 years and insurance itself is a heavily regulated business. And the fact that now the rules and regulations are relatively set in place with very clear regulatory framework for the industry participants, it's actually a very beneficial development for industry players to be able to focus the long-term sustainable development of business models going forward rather than being constantly on the outlook for any new potential changes to the regulations. So the answer is it's quite good to have a very clear pathway to deal with the regulatory changes and now it's pretty much set in place and therefore, we are able to focus our business in the near and middle term going forward. And then with respect to the Internet insurance product itself, the upside of this regulatory change recently is that protection products are now being made clear that it's very conducive to online insurance companies to market with a very clear pathway for us to operate. And Huize, having ourselves being a long-term participant in this particular sub-segment of the market. For example since 2015, we have been very focused on co-developing critical illness product which itself is a very much necessity protection product nowadays with respect to the middle income groups in China where…

Yes.

Thank you. Your next question comes from the line of Zeyu Yao from CICC. Please go ahead.

[Foreign Language] So first, I want to ask in detail about the new regulation. So will it be negative impact for our cooperating insurance companies and especially for the saving type business? And next, what is the process of acquiring the offline brokerage company and what are the online and offline strategies for the company in the future? Thanks.

Thanks for your question. So two questions, the first one relating to the impact on the supply side for I guess online savings insurance products as we move into the new regulatory regime starting from next year. I think the short answer here is that we have been cooperating with over 100 insurance companies in the past and therefore we are able to co-develop new savings products with issuance partners who are qualified obviously under new regulatory regime with respect to their, for example, core solvency ratios and other metrics that are required now under the new regulations. So I think that we will be actively looking to cooperate with partners who are qualified under the new rules. And with respect to maybe the existing suppliers of savings insurance products that we have been working with, I think the model here could be moving towards the offline context where we are still able to leverage on our online platform to generate leads and acquire customers from our omnichannel distribution capabilities and be able to route customers for consultations and also for the settlement through our offline branch network. So I think that's really the genesis of our online and offline business model as we have been building up over the last few quarters and we have been actively deploying capital as well as investments in this area. I think that also answers the question with respect to the second question, which is the online/offline business concept, which again I think that we are always going to utilize our online platform as a front to service customers. Customers come to our platform for product information, for comparisons, for consultations. Huize has always been operating on more of a passive marketing model where we provide content. We also work with third-party partners to educate the market as a whole on insurance products. And for customers who are interested in having consultation, they will be able to request for a one-on-one discussion with our consultants. And therefore, it's always been more of a passive approach and this also fits into the regulatory requirement for online insurance distribution as you can understand from reading the regulatory regime documents.

Can we move to the next question, sir?

Yes, please.

Thank you. Your next question comes from the line of Xinqi Liu from Guotai Junan Securities. Please go ahead.

[Foreign Language] Congratulations on the company's achievement for the last three quarter. And this year is particularly a year for the industry to operate the business and to look forward and how can we assess the risks of the business next year? And will the situation be better or worse? And can you talk about the planning of the offline points of the business development? My second question is about I think the key concern of the investor is the stock price and it's obviously undervalued. And is there any plan to buyback? I'm not sure if there is enough cash reserves for the buyback. Thank you.

Thank you for your question. So for your first part about our outlook for next year. I think we would be honest to say that the next few quarters for the whole industry will be an adaptation period or transition period. But again because of our long-term engagement in the industry and for our continued success in innovating our business model, our nimbleness in kind of adapting to regulatory changes since all these regulatory changes have been happening in the last few years, we will still be able to maintain our business growth as well over this challenging periods of time. So I think that what we would say is we are cautiously optimistic. I think that again as Mr. Ma alluded to earlier in his response, now that the regulatory framework is clear, I think that most players in the market would not be able to focus the business development and able to spend the investment dollars wisely in things that would be productive rather than trying to anticipate various scenarios and therefore in a resource allocation perspective, some may go into less productive investment areas. So I think in that respect, I think that we are cautiously optimistic because of the fact that we have been operating for 15 years because we've been investing in the platforms business, we have been investing in our technology stack. We have incurred over RMB 100 million over last two years. And therefore, we are now proud to say that throughout the online business scenarios from the front end to the back end, we have very well mature technological tools that not only we are enabling our in-house consultants to serve the customers, but now we also already beginning to export this digital capabilities to outside insurance companies' customers. There are few…

Okay, thank you Ron.

Thank you. That was our last question due to time constraint. I will hand it back to Harriet for any closing remarks now. Thank you.

Thank you, Operator. So on behalf of Huize's management team, we would like to thank you for your participation in today's call. And if you require further information, please feel free to reach out to us. And thank you for joining us today. This concludes the call.

Thank you. Thank you for participating. You may all disconnect now. Thank you.