Ladies and gentlemen, thank you for standing by, and welcome to Huize Holding Limited's Fourth Quarter and Full Year 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 would 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 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. Ron 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 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] [interrupted] Hello, everyone, and thank you for joining Huize’s fourth quarter and full year 2022 earnings conference call. In the fourth quarter, COVID outbreaks weakened private consumption and consumer confidence in China, hampering the recovery of both the overall domestic economy and the insurance industry. Against the challenging macro backdrop, we've reported another set of encouraging results, as we took proactive steps to adjust our product offerings and business strategies to mitigate downside risk, in line with our mission to achieve operational resilience. We also made good progress in implementing our strategic roadmap to build an omnichannel digital insurance service ecosystem that integrates agent, business and customers, or ABC. In 2022, total gross written premiums or GWP facilitated on our platform remained stable at RMB4.9 billion despite a high base for comparison. In line with our guidance in the third quarter, we achieved non-GAAP net profit of approximately RMB14 million for the fourth quarter. In terms of product mix, although the pandemic limited our growth in terms of total first year premiums or FYP, facilitated on our platform, we continued to see heightened public health awareness drive a rebound in the demand of health insurance. In the fourth quarter, the FYP of long term health insurance products increased by 39.2% sequentially, benefiting from our leading market position in long term insurance and our relentless efforts to maintain a high quality user profile. The GWP contribution of our long term insurance product was 96.2% remaining about 90% for the 13th consecutive quarter. Renewal premiums also increased substantially by 80.8% year-over-year to more than RMB1 billion, which highlights our operational resilience amid a complex business environment. In terms of user profile, about 65.3% of our long term insurance customers were from higher tier cities with an average age of 33.8…

Thank you, Mr. Ma and Harriet. Good evening, everyone. In the fourth quarter, operating conditions in China remained tough. The significant macroeconomic challenges during the quarter weight heavily on consumer confidence and recovering household income and hindered sales of insurance products in China. The total gross written premium or GWP for the entire insurance industry in China was RMB531 billion in Q4, which is down 16.3% sequentially. Against the backdrop of macro challenges and a sluggish industry recovery, we're very pleased to still achieve a 16% quarter-on-quarter increase in total GWP facilitated on our platform totaling RMB1.4 billion in Q4. And to close out the full year 2022 with total GWP facilitated on a platform of RMB4.9 billion, which is essentially flat on a year-on-year comparison basis. For the full year of 2022, we have added 1.2 million customers to our ecosystem, bringing the total from 7.5 million to 8.4 million as of the end of 2022. And most importantly, in line with our guidance given in the previous quarter, we also achieved profitability in Q4, thanks to the successful execution of our key business strategies. First, on the product front, we continued our strategic focus on long term insurance products. And our offerings in this category continue to be well received by customers. The GWP contribution of our long term insurance products exceeded 90% for the 13th consecutive quarter. Second, on our channels, we continue to improve the quality of our user base and enhance customer acquisition capabilities via our omnichannel distribution platform. Our new To-A, To-C business line maintained strong growth momentum in the offline market, generating a total FYP of more than RMB200 million in 2022. And finally, on the corporate front, we continued with our group wide organizational structure optimization and achieved significant cost savings in…

Thank you. [Operator Instructions] Our first question comes from the line of [Yu Yu Shang] (ph) from CICC. Please go ahead. Your line is open.

[Foreign Language] So I have two questions. The first one is related to the operating strategy. This year will you put more emphasis on growth or profitability? What business goals do you set? And then, how to achieve them? And the second one in terms of the AI technology, we've noticed that our digital technology has announced to connect by the [indiscernible]. I'm just wondering how AI can affect insurance sales business. Could you share some more color on this? Thanks.

Thank you. It's Ron here. Two questions from your side. So the first one regarding the business strategy for this year. I think clearly, we are seeing the end of the pandemic towards the end of the last quarter of last year. And we said we're seeing that the reopening of the Chinese economy has seen the consumer recovery in everyday consumption in the first quarter. I think we're also seeing initial effects of that spilling over to the insurance industry and in the first quarter we're seeing some modest recovery on a year-on-year basis across all business lines. And the pandemic effect on raising people's awareness on procuring health insurance for themselves and the families, I think, we are seeing structural long term growth to be very intact with the improved awareness. And I think in the product perspective, we will continue to very focus on developing variable money propositions for the broader market. And I think the recent announcement that we have with Ping An Health Insurance is a very good example of that, we'll continue to iterate and upgrade our product matrix and co-develop products with leading insurance companies. And now that we have a new strategic collaboration with Ping An and that will be very positive for the product side of things. I think your question on the growth versus profitability. I think this year we will be cautiously optimistic on the growth prospects for the economy and the industry as I just said before. But then I think the focus for the organization and I think for the industry overall will be very much on the profitability side. The bottom line of the P&L will be the main focus of this year. And I think we have just given out clear guidance for the full…

Thank you. [Operator Instructions] Our next question comes from the line of Amy Chen from Citi. Please go ahead. Your line is open.

[Foreign Language] The first question is regarding latest regulatory notice regarding the self-inspection of the online marketing of insurance agents. We're wondering what would be the potential impacts for Huize sales going forward? Second question is relating to Huize’s products. We see that more and more smaller insurers are actually exiting in the online insurance space and we see that Huize has been starting to collaborate with relatively larger scale insurers. We want to understand more about the difference in terms of commission take rate and product design regarding to these new products? And also regarding to the full year of 2023, is there a guidance for premium facilitated? Thank you.

Thanks, Amy. It's Ron here again. Thanks for joining again. So the first question on the regulatory -- the self-inspection notice. I think this is something that we have been taking seriously ever since the first regulation came out on the online insurance marketing business compliance requirements two years ago. And then we have been continuously adapting to the regulatory changes and this is something that has not been -- it's definitely not new to us. And in fact, we have -- basically over the last two years we have been adjusting our business processes, we have been strengthening our controls of our third-party channel partners into the compliance requirements. We have clear guidelines and clear requirements for our channel partners to obey and to abide by in order to cooperate with us on a compliant manner. But we have been holding compliance very highly throughout the last two years. And I think this self-inspection is just an execution step by the regulators based on the earlier regulatory framework and this is not a new regulatory requirement per se. It's just an execution step. So for Huize, because we have been maintaining high standards of compliance throughout our whole ecosystem, we are glad to be confident that, first of all, we will be fully compliant with the regulators' self-inspection requirements. We will also encourage our third-party channel partners to cooperate fully. And we should come up on this three month inspection, which starts from April 3. And to finish by June 3, we should come up with this self-inspection even stronger from a competitive standing versus some of our peers in the industry, just because of the higher compliance standards that we have here at Huize. And I just want to note that also to give you a sense of…

Thank you. We'll now move on to our next question. Our next question comes from the line of Rick Zhao from Morgan Stanley. Please go ahead. Your line is open.

[Foreign Language] The first question is that, the regulatory is doing research on reducing the pricing rate, what might be the potential impact of the company and any preparation from our side? And second question is that, with the China's economy and the consumer recovery, have we seen a better selling trend on production products like the [indiscernible] and also medical versus the pandemic and [internet] (ph) industry? Thanks.

Thanks, Rick. Thanks for joining. Welcome you to Huize story. I think the first question on the pricing front, yes, I think that we do note that the regulators are now looking to maybe adjusting the pricing rates on the products. And I think the short term impact on, not just the company, but also on the overall industry is that, we might see some of the current products to reach the end of the lifecycle. So I think that might be translating to some of the accelerated sales of some of these existing products in the next quarter or two. I think that will be some of the short term impact, which actually should be a net positive for the company, because we are well positioned in terms of the product supply side. We have a very good market leading products that we can facilitate to the market. For a longer -- medium to longer term, I think that because we have always been very focused on co developing new products with our upstream insurer partners, we are fully prepared and we are already in discussions to iterate the savings products into the next version, maybe post the pricing rate regulatory changes. So I think we are fully anticipating some of these changes going into the second half this year and 2024 onwards. So with that, I think that again because of the way that we have been operating with a very clear focus on middle class mass affluent families in China. I think that the good quality customer base and the ability that we can acquire new customers will provide us an upper end in terms of negotiating and working with the larger middle sized -- mid to larger sized issuance partners to help co-develop new versions of these savings products and help products to the marketplace to adapt to the changes in the regulatory side. So I think that will be the first question. Second question, I think I told the other analyst earlier on the call. We are seeing some modest recovery in Q1. On a year on year basis, actually, are quite strong versus Q1 of last year. So we are still cautiously optimistic. I think the broader external environment is definitely very challenging right now as we speak. I think the geopolitical tensions remain extremely tight. So still a lot of uncertainties on the exports and I think that will also have some [indiscernible] effect on the SMEs in China and so forth into consumer covenants. But then I think Q1, we are seeing modest and healthy recovery across the key product segments, i.e., long term health and long term savings -- long term savings products. So I think that we should be hopeful for a modest rebound in the first half this year. Thank you.

Thank you. There are no further questions at this time. So I'll hand the call back to you for closing remarks.

Thanks, operator. It’s Harriet here. So 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 with the IR team. And thank you for joining us today. This concludes the call.

Thank you everyone. Have a good evening.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please standby.