Ladies and gentlemen, thank you for standing by, and welcome to Huize Holdings Limited First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the 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 Events and Webcast section. 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 first quarter of 2022. 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 first quarter of 2022. 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] [Interpreted] Hello, everyone, and thank you for joining Huize's first quarter 2022 earnings conference call. In the first quarter, Huize's business results demonstrated strong resilience despite a challenging operating environment caused by the ongoing pandemic, softening insurance demand in China, due to economic uncertainty and the impact of the tightening industry regulation. Thanks to the solid foundation we have established in past years. Total gross written premiums, or GWP, facilitated on our platform remained fairly stable at RMB1.3 billion during the period, despite a high base for comparison in the first quarter of last year. In terms of product mix, we have maintained a strong competitive edge in long-term insurance product. In the first quarter, GWP contribution of long-term insurance products remained above 90% for the 10th consecutive quarter. Renewal premiums increased by 113.9% year-over-year to RMB1.1 billion, providing steady cash flow for us to withstand times of economic downturn and market volatility. As we continue to grow our client base, we have maintained a high quality user profile. As of March, our cumulative number of insurance clients reached 8 million, representing a quarter-over-quarter increase of approximately 495,000. In the first quarter, roughly 63.7% of our long-term insurance customers were from higher tier cities, with an average age of 33.5%. In the first quarter, our average persistency ratio for long-term life and health insurance in the 13th and 25th month have sustained at the industry high level of 94%. In terms of first year premium, the average ticket size of savings products was approximately RMB29,000 in the first quarter. At the end of the third quarter, we have cooperated with 100 insurer partners, despite the expected short-term impact of the new regulations on the supply of online insurance products. Our supply chain has recovered quickly, thanks to the…

Thank you, Mr. Ma and Harriet. Good evening, everyone. For this call, I would like to quickly recap a few highlights and takeaways from our first quarter 2022 results. For detailed discussions of financial line items, I would kindly refer you to our uploaded earnings release for full details. Overall, we are very pleased to report a set of resilient operating and financial results for the first quarter of 2022 in light of significant macroeconomic headwinds, a resurgence of Omicron in China and the challenges brought by tightening regulatory measures in the industry. In the first quarter, total gross written premiums, or GWP remained fairly stable at RMB1.3 billion, which represents a 4% year-over-year decrease. And that is despite a high base for comparison that was triggered by the transition to the new statutory definition of critical illness in the first quarter of last year. At the same time, first year premiums, or FYP reached RMB260 million. Renewal premiums more than doubled to RMB1.1 billion, and that reflects the continued high user stickiness of our customized long-term insurance products. One key highlight from the quarter result is that we have continued to co-develop long-term customized protection and savings products with our insurance partners. One of the key challenges that we had expected going into the year 2022 was the disruption on the supply side of online insurance products due to the regulatory changes. As Mr. Ma has mentioned in his opening remarks, we have already made significant progress in replenishing the supply of products on our platform and we have now a full suite of co-developed products covering long-term health, savings and P&C products. In the first quarter, our platform offered 482 insurance products online. These efforts continued to help to drive GWP contribution of our long-term insurance products to…

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question will come from the line of Amy Chen from Citigroup. Please go ahead.

Hi, thank you, management for letting me have the chance to ask the question. And I'll be asking question on behalf of Michelle today. And the first question would be that as management has mentioned, there is a new regulation this year that has brought some short-term headwinds on the supply chain -- on supply side. Would like to -- would you be able to share more color on how Huize has adapted to this new regulation? And what was the strategy to better cope with the changes? And did you see any changes in terms of product line and in terms of channel mix? And the second question would be on, can you give us some updates related to the second quarter operations? Thank you very much.

Okay. Thanks, Amy. It's Ron here. I will take your questions. So the first question regarding the impact on the regulatory changes starting from this year. I think that the regulatory changes have been, well, I guess, absorbed by the market and industry. And I guess three key points that I would like to answer in relating to this question will be that, most importantly, we have replenished our supply side with over 400 product as of the first quarter of this year and that encompasses the full suite of products from long-term health, savings and also property and casualty. So I think that's the major concern that people have or the market has on the sector is that the disruption of the supply side on the online insurance product. I think that we have demonstrated that we have already made some good progress in replenishing the supply. And also recently, last week, we have upgraded our portfolio of customized products and that includes even an online version of annuity products, I guess which is one of the first in the industry, which we have co-developed with Heng An Standard Life, which is a joint venture backed by the Aberdeen Group in the UK. So I think that this is all a major milestones and a significant concrete steps that we have been taking in terms of addressing the supply chain concerns. So that's the first point I'd like to make. The second point is that with respect to the impact on the regulation, that's also a point about how the first year commissions or the first year premium commissions had been constrained about 60%, thereby affecting the economics of the policy for brokers like ourselves. And I think that what we have achieved so far is that on a…

Thank you very much. That was very clear.

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

Hi, thank you for taking my question. And this is Mindy from CLSA. And I got two questions. The first one is on, as we noticed -- as we see the resurgence of COVID outbreak in the first half in China. And I just wonder how would they -- how would that affect our business in the first half of 2022? And my second question would be, as we noticed earlier that Huize has been included in the provisional list under HFCAA recently, and I'm just wondering what would be the impact? And how does the management plan to deal with the potential risk of the listing? That's my two questions. Thank you.

Thank you, Mindy, for your questions and thanks for joining. So two questions, the first question on the COVID impact on the business. I think -- on two sides of things, right? I think first side of things would be from a business operational perspective. I think that we are not as affected by the emergence of COVID than maybe some of the more traditional offline agencies or brokerages, because most of our activities are done online, as you know. However, I think that the more pertinent point to make is that the Omicron outbreak has really dampened income expectations of the average consumer in China. And also I think that it also has, unfortunately, let to quite massive layoffs in the economy across different industries. And so I think that the major impact of Omicron on the industry really has to do with the consumers' confidence and the consumers' ability or willingness to consume any insurance products, which as we all know insurance product is non-essential item in a way, it's the more discretionary of all financial products available, compared to things like securities or fixed income product, I think. And therefore, I think that the major impact Omicron has is on the demand side of the industry, and it has been very, very weak in the first two quarters as we can also take reference from the FYP numbers of the major insurers in China and also from the other brokerages and third-party intermediaries. So that will be the answer to the first question. And for the second question on HFCAA and the delisting risk, I think that the market has somewhat absorbed all of this news flow already by now. I think most of the Chinese companies that are listed in the U.S. ADR markets has already gone on this list. And I think from the company standpoint, what we would like to make as a statement is that we continue to maintain our listing in the U.S. and we will take all the steps that is required to make sure that we will state our shareholders interest and shareholder value. And obviously, we'll be looking into measures, including potential secondary delisting in Hong Kong in order to somehow hedge this risk of the delisting scenario. And I think that we also have seen some encouraging signs in the news reporting on the collaborative efforts between the two sides of the regulators table from the China side and also on the U.S. side in terms of progressing on the PCAOB issues on on-site inspection of audits, et cetera. I think, frankly, this is somewhat of the corporate level of control, but we remained optimistic on a resolution of the matter between the two sides, and we on our own level, we'll continue to take all measures in order to safeguard shareholders' interest.

Thank you, Ron.

Thank you.

It's very clear.

Thank you. [Operator Instructions] Thank you. As there are no further questions, I will turn the call back to Harriet for closing remarks.

Thank you, operator. So in closing on behalf of Huize's management team, we want to say 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 this concludes the call.

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