Ladies and gentlemen, thank you for standing by, and welcome to Huize Holdings Limited Second 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, Amber. Hello, everyone, and welcome to our earnings conference call for the second 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 second 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] Hello, everyone, and thank you for joining Huize's second quarter 20222 earnings conference call. [Foreign Language] In the second quarter, Huize's business continued to demonstrate strong resilience despite softening insurance demand caused by ongoing economic uncertainty and disruptions caused by regional pandemic restriction in China. Thanks to our solid digitalization and product innovation capabilities as well as our in-depth focus on cultivating users lifetime value. We continued to drive industry digitalization and press on with executing on our strategic clients of building an omnichannel digital insurance service ecosystem, thereby achieving another quarter of remarkable growth. In the second quarter, total gross written premiums or GWP facilitated on our platform increased by 30.5% year-over-year to RMB 872 million, and our total operating revenue also increased by 30.5% year-over-year to RMB 248 million. [Foreign Language] In terms of product mix, in response to shifting consumer preferences and macroeconomic backdrop, we have strategically focused on promoting the distribution of savings insurance product. In the second quarter, the first-year premiums, or FYP of savings products facilitated on our platform amounted to RMB 282 million, up by 100 employees we present year-over-year. Correspondingly, our total FYP increased by 59.9% year-over-year to RMB 485 million, reflecting that our comprehensive product offerings have supported our high-quality business growth. Meanwhile, we have maintained a strong competitive age in distributing long-term insurance products. In the second quarter, the GWP contribution of our long-term insurance product was 91.7%, remaining above 90% for the 11th consecutive quarter. We have also maintained a high-quality product while recording robust business growth. As of June, our accumulative number of insurance clients reached 8.2 million. In the second quarter, about 64.2% of our long-term insurance customers were from higher-tier cities with an average age of 33.3 years old. In terms of FYP, the…

Thank you, Mr. Ma and thank you, Harriet. Good evening, everyone. For the purpose of this earnings call, I would like to quickly recap a few key takeaways from the operational and financial results for the second quarter. And for a detailed discussion of financial line items, I would like to refer you to our uploaded earnings release for full details. We are very pleased to report an encouraging set of operating and financial results for the second quarter of 2022 according which we delivered top-line growth, coupled with improved operational efficiency. And particularly set against a very challenging macro environment with continued nationwide COVID resurgence, leading to much weakened overall economic activity and depressed [Technical Difficulty] uncertainties. In the second quarter, total GWP increased by a solid 3.5% year-over-year to RMB 872 million, which is mainly driven by the strong growth in first year premiums or FYP of 59.9% year-over-year to RMB 485 million. The strong recovery in FYP is a testament to the agility of Huize's business model, to adapt to the changing regulatory and market environment and the successful execution on a product strategy to focus on the core development and distribution of the increasing whole life insurance product category in 2022. The highly successful product [Bee No.2 Beyond] [ph] series, which we [co-operate] [ph] with Hong Kong Life has been one of our top selling products on the platform. During the quarter, and together with other quality of our products such as the retirement annuity product with Sun Life Everbright as well as other savings product, the long-term savings insurance product category, we call it a very strong FYP group of 1.4x year-over-year. The recovery in our other important long-term health insurance category has also been strong during the second quarter as we launched new iterations…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of [Yu Zhong] [ph] from CICC. Please ask your questions, Yu?

[Foreign Language] Here I have three questions. And first question would be that, can you give us some updates on the operation of your offline business? And the second question is, what is your current product portfolio? And in terms of take rates, could you share some more colors on the first year and year-over-year take rates of different products? And the last question, after the pandemic versus the customer demand most of the week, what do you think of the insurance market and second half of this year and what's your corresponding operation strategy? Thanks.

Okay. Thanks for the questions. It's Ron here. Let me address these three questions. I just taken down. The first question regarding the development of the offline business. I guess, we have also mentioned in the opening remarks that we have been seeing very strong growth momentum in our To-A, To-C model, which is the independent agents model that we have kick started in the first quarter of this year. I think that this is also has to do with the ability for us to connect to offline product supply, as well as our existing online product supply matrix, which [Technical Difficulty] offline independent agents to serve their customer base in a very efficient manner, connecting them to the online and offline product supply as well as leveraging on digital tools to serve the end customers efficiently and effectively, especially during this period where COVID resurgence and regional pandemic resurgence have still been restricting the traditional offline agency model. So I think that is really once you hire that we just mentioned in the opening remarks that it's great to see model has seen very strong progress. We have connected to independent agents that's covering the major Tier-1 and Tier-2 regions in China, including Beijing, Shanghai, Guangdong, Shenzhen and Sichuan. And we also shared in the opening remarks that the FYP that has been facilitated by the To-A business model has already reached almost RMB 16 million in the first six months of this year. And I think we do target to see this number growing to about RMB 100 million by the year-end. So for the second question, I think that the takeaways and commission rates for the various products on the platform, I think that essentially the FYP commissions for online products is capped at 60%, 60% for…

Do you have any further questions, Yu?

No, thanks. Very clear.

Thank you very much. Our next question comes from the line of Amy Chen from Citi. Please ask your question, Amy.

Hi. Thank you, management, for giving me the chance to ask questions. So the first question will be also on the commission rate and take rates for our newly launched whole life products compared to critical illness products. And the second one would be, I remember on our first quarter result call, management mentioned that we expect to achieve quarterly profits in the third quarter and the fourth quarter. Do we still maintain that guidance? Or do we have any new guidance for the second half of the year? Thank you.

Thank you, Amy. Thanks for joining the call and your continued support for us. I think the two questions, on the first one take rates for the various products. I think pretty much we're looking at around 60% or so for the savings products that we're now selling on the platform. I think you also need to consider the difference in the commission rates for the different durations of the savings products, because some customers might be going for a 10-year payment, or some will be going for a 15-year, 20-year payment. And so that difference in duration will also lead to a difference in the commission rates. So I think what we see on a planned basis, we're looking at around close to 60% for the savings products. So if you compare that with the online health insurance product, which essentially is also kept at 60%. There is a pretty small differential between the two. With respect to the first-year premium commissions. But for the lifetime value commission, then there'll be a difference there because as I just answered to the earlier question before, the savings product. For example, the increasing whole life product that we're selling, the LTV commissions for the second to the fifth year, probably it will be another 10% to 15% commission, versus for a long-term health product like a critical illness, will be getting an 110% lifetime value total. So there will be around 50% in the year two to five. So there'll be a difference in take rates with respect to the two products specifically. And for the second question regarding the guidance for second half, I think we do maintain, we do target the second half quarterly profitability guidance, I think that would require us to continue to implement on a cost optimization program. And also obviously, very much rely on a continued macro step, I guess macro recovery so that consumer demand and consumer confidence for consumption is -- will be covered so that insurance products being the most discretionary of all financial products [indiscernible] such will also be improved and recovered. So I think, we do maintain our guidance. And we do target a very -- we strive our best to meet these targets in the second half of the year.

Thank you very much. That's very clear.

There are no further questions at this time. I'd now like to hand the conference back to Ms. Harriet Hu for closing remarks.

Thank you, Operator. In closing, on behalf of the Huize's management team, we 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. Thank you all for joining us today. This concludes the call.

Thank you.

Thank you. This concludes our conference call for today. Thank you for participating. You may now disconnect.