Ladies and gentlemen, thank you for standing by and welcome to Huize Holding Limited Fourth Quarter and Full Year 2021 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 at ir.huize.com under the Events and Webcast. I’d now 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 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 fourth quarter and full year 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.

Hello, everyone and thank you for joining for the fourth quarter and full year 2021 earnings conference call. China’s insurance industry witnessed a number in 2021. However, this brought about new opportunities and a year of reform for Huize. Despite the ongoing pandemic, further regulatory refinements and increasing uncertainties in the overall market and business environment, Huize has adhered to its user-centric strategy, high-tech and digitalization philosophy and online to offline integration, which led to another year of satisfactory results. In 2021, total gross written premiums, or GWP, facilitated on our platform increased by 66.2% year-over-year to RMB5 billion, while operating revenue increased by 84% year-over-year to RMB2.25 billion, meeting the revenue guidance we provided for full year 2021. In the fourth quarter, total GWP facilitated on our platform increased by 90.2% year-over-year to RMB1.99 billion and operating revenue grew 1.5x year-over-year to RMB980 million. GWP for long-term insurance products accounted for 97% of total GWP and continue to generate high-quality business for our insurer partners. While growing rapidly, we were able to continue maintaining a high-quality user profile. In the fourth quarter, roughly 67.1% of our long-term insurance customers were from higher tier cities, with an average age of 35.3 years old. In terms of first year premiums, the average ticket size of long-term insurance products increased from RMB6,684 in the third quarter to RMB9,593 in the fourth quarter. As of November, our persistency ratios for long-term life and health insurance in the 13th and 25th month have sustained at an industry high level of 94%. Now turning to our products, following the announcement of the new regulations on Internet personal insurance, we proactively expanded our savings product line to cope with the surge in market in mind. In the fourth quarter, our savings insurance products contributed to about…

Thank you, Mr. Ma and Harriet and good evening, everyone. First of all, I would like to thank everyone on this call for your continued interest in following the company, in particular, in light of the recent turbulent market conditions. And for our friends in the Asian time zone, thanks so much for spending the Friday night with us here. And to those of you who may currently be on the quarantine in lockdown or semi-lockdown load in Hong Kong or Mainland China, Please stay safe and health. For the purpose of this call, I would just like to quickly recap a few key highlights and takeaways of this quarter’s operating and financial results. And for the detailed financial line items, I would like to kind of refer you to look at our uploaded earnings for these for more details. Overall, we’re very pleased to close out the final quarter of 2021, with record highs in both total gross written premiums or GWP facilitated on our platform as well as total operating revenues. For full year 2021, total GWP amounted to RMB5 billion, representing strong growth of 66% year-over-year. First year premiums of FYP accounted for RMB3.1 billion or 62% of the total GWP, which is up 99% year-over-year from 2020. Renewal premiums accounted for RMB1.9 billion or 27.8% of total GWP, representing a year-on-year increase of 30.5% in 2021. As we have expected during our Q3 results call, our strategic focus on savings insurance products since the beginning of the year, coupled with the strong market demand for savings insurance products for consumers was expected to provide strong momentum for growth in savings products and overall FYP in the fourth quarter. Our continued strong growth in savings product FYP that we have demonstrated in the results, a real reflection…

Thank you. [Operator Instructions] Our first question comes from the line of Michelle Ma from Citi. Please ask your question.

My first question is about the product mix for the first year premium and written in the fourth quarter last year, we noticed the take rate for premium actually increased as the operating revenue growth outpaced GWP underwritten in the Q4 last year. So, what’s the reason behind? And the second question is about the radical regulatory environment changes. What’s our new product strategy? And what’s the difference between the old model of cooperating with medium-sized insurance company versus currently, we need to collaborate with more top-tier insurance companies, what’s the major difference and the difficulties we face here [Foreign Language]?

Okay. Hi Michelle, it’s Ron here. Thank you so much for joining us and for the two questions. Maybe quick answers to both questions from me. First question really relating to the take rate of the fourth quarter and how the product mix is looking at into the fourth quarter for the FYP. So, I think the overall take rate that you have seen, which has increased is really a function of the fact that the mix of GWP in the fourth quarter has a much larger contribution from FYP around 71.3% of the fourth quarter GWP is coming from first year premium policies and 28.7% from renewals. And in terms of the FYP product mix, I can give you some more detailed breakdown here. Roughly 63% is coming from long-term life. And long-term life is mainly the incremental savings product that we are distributing for HongKang Life. And then around 21.6% is coming from annuities and then 10% coming from long-term health products, which is critical illness and then the rest of it is really from the short-term products. So, I think overall, the take rate has improved mainly as a result of the increased proportion of contribution from FYP over gross written premiums number. So, that’s the answer to the first question. For the second question with respect to the new operating environment after January 1st, I think on the product strategy perspective, I think they will be quite clear to tell the market that we will be seeing significant, I guess changes on the online side as it relates to the online savings product segments, which has obviously been a key driver for both. For the 2021 year and also as we expect in the New Year, I think this is a combination of a few factors…

Right. Thank you. Our next question comes from the line of Mindy Gao from CLSA. Please ask your question.

I have got two questions. The first one is regarding to the Senhao Insurance that you agreed to acquire Senhao insurance in last December. And what will be your business plan for this company? And what is your plan for online and offline integration plan in the future? And the second question is regarding the technology export. And you have mentioned previously that you have begun to export your technology to other insurance companies, and this will generate new revenue streams and just I wonder, could you please give us an update on this business and related to revenue and as well as this outlook in the future. Thank you.

Okay. Thanks, Mindy. It’s Ron again here. So, two questions. The first question on the O2O integration and the Senhao acquisition and our business plan with respect to that. I think I also touched upon that quickly just now in the response to Michelle’s question. I think the key focus areas here is that one thing we have always been trying to complement our service capabilities in the offline context. So far, that’s now up to the beginning of last year. I think over the first 15 years of the company’s development, we have really have been solely focused on the online distribution, the online service capabilities to our customer set. And I think starting from last year, we have a combination of a few things. One thing the regulatory changes and two, I think with respect to our own internal business plan to improve and deepen the engagement with our existing customers to drive repeat purchases, to drive attention, to increase lifetime values. We do have the need to have extensive offline coverage so that we can service these customers and particularly the higher value customers that we can extract from our user database internally to cross-sell and upsell as we have also mentioned in the opening remarks. So, with a bolt-on acquisition like Senhao, I think that really accelerates our efforts here while building it out organically. And it does seem quite time consuming for us to go into province on our own with respect to the regulatory in time table, etcetera, etcetera. So, that’s the first point here. And the second point is that with respect to the regulatory new environment, I think offline products will become increasingly important for us to distribute as well. We are beginning to distribute this year, starting with our own internal…

Thank you.

Thank you. Our next question comes from [indiscernible] from CICC. Please ask your question.

First, congrats to the impressive results of our management in Q4. And I have two questions. The first one is about Senhao, so will our company continue to hire more agents or brought our business to more provinces. And next question is about profit margin. So, we see the margin has improved in Q4. So, I would like to know whether it’s sustainable since we changed more product layers to large companies, and they are still cost related to offline outlet. So overall, will the margin in 2022 to be improved or deteriorated compared with the 2021 level? Thanks.

Great. Thank you so much. So, two questions. The first question, with respect to the offline business and whether we will be looking to expand corporate. I think the answer clearly is, yes. I think right now, I think we will probably be happy to start with the first type of locations that we have already put in place through this acquisition. And I think that this has only covered, I would say, most of the key insurance heavy or the top ranking areas for our target markets. But then I think there would still be a few areas where I think we can also look to expand into. So, I think we would do it on a measured basis as we go along for the down this track. I think we will be looking to expand for that, but we will be happy with the initial kind of coverage of that work that we have already got in place through this acquisition. Secondly, on the profitability of the company, I think, yes, in Q4, we have turned a profit, albeit a marginal profitability in the fourth quarter. As we have also mentioned in the opening remarks, we do expect the next two quarters, Q1 and Q2 to be extremely challenging from an operating perspective, not only are we adjusting to the new regulatory regime and new business models and also from a macroeconomic standpoint, extremely challenging. I think most of you in Shenzhen are still placed on the lockdown in Shanghai, I think in semi-lockdown and I think over the country, the population also in kind of lockdown mode. And I think that the consumer covenants, which are very low level, particularly due to the quite massive layoffs that we have been seeing in the different industries. So, I think definitely has a great significant impact on the willingness to consume, I think the discretionary financial products and within the financial products, I guess insurance products release or the more discretionary of all. So, we do see next two quarters to be challenging. So, I think we have not given an official guidance, and I think we will deliver that for now, and we would be also in the opening remarks, we are continuing our program of cost reduction throughout the corporate structure. And I think that this is something of a priority in the first half of this year. We will be further driving cost control, driving down of this cost base. I think we have already achieved a double-digit percentage figure in the first quarter to-date, I think we will continue to drive further cost reductions in the second quarter. Thank you.

Alright. Thank you. We have reached the end of the question-and-answer session. I will turn the call back to Ms. Harriet Hu, Investor Relations Director for closing remarks.

Thank you, operator. So, in closing, on behalf of the Huize management team, I would like to thank you for your participation in today’s call. And if you require any further information, please feel free to reach out to us. And thank you for joining us today, and have a nice weekend.

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