Ladies and gentlemen, thank you for standing by and welcome to Huize Holding Limited’s First Quarter 2023 Earnings Conference Call. [Operator Instructions] Today’s conference call is being recorded and the webcast replay will be available. Please visit the 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. Welcome to our earnings conference call for the first quarter of 2023. 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 press 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 the Co-CFO, Mr. Kwok Tam. Mr. Ma will start the call by providing an overview of the company’s performance and operational highlights for the first quarter of 2023. 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 Huize’s first quarter 2023 earnings conference call. In the first quarter of 2023, as China’s economy gradually recovers and the private consumption and consumer confidence improves, the insurance industry showed clear signs of revival. We leveraged this positive trend by actively refining our product offerings and business strategies to strengthen our comprehensive online to offline O2O integrated digital insurance service ecosystem. As a result, Huize reported another set of remarkable results in the first quarter of 2023. On a sequential basis, total gross written premiums or GWPs, operating revenue and non-GAAP net profit all achieved double-digit growth during the period. Total GWP facilitated on our platform reached RMB1.93 billion, marking a 33.4% sequential increase. Our total operating revenue and non-GAAP net profit also increased by 15.7% and 3.3% quarter-over-quarter to approximately RMB300 million and RMB18.4 million in the first quarter. In terms of product mix, first year premium or FYP facilitated on our platform increased by 58.6% sequentially to approximately RMB660 million. FYP offer long-term health insurance product and savings products increased by 32.8% and 50.4% quarter-over-quarter to RMB180 million and RMB340 million respectively, highlighting the high quality growth driven by our comprehensive product offering. At the same time, we continue to benefit from our strategic focus on distributing long-term insurance products and the competitive edge we have established, GWP contribution of our long-term insurance products was 92.7%, marking the 14th consecutive quarter above 90%. Renewal premiums also demonstrated significant growth, rising by 23.2% sequentially to RMB1.27 billion. At the end of the first quarter, our accumulative number of insurance clients reached 8.7 million. We remain focused on targeting high-quality customers for our long-term insurance products. During the quarter, about 66.2% of our long-term insurance customers were from higher tier cities with an…

Thank you, Mr. Ma and Harriet, and good evening to the audience in the Asia time zone, and good morning for those in the U.S. In the first quarter, the insurance industry in China experienced a gradual recovery, which is in line with the improving consumer confidence and household income. As operating conditions have improved sector-wide gross written premiums increased 9% year-over-year to a number around RMB1.6 trillion. Leveraging our omnichannel distribution ecosystem, we have a chief business growth that far outpaced and outperform the overall market trajectory. We delivered a 44% year-over-year and 33% quarter-on-quarter growth in total GWP facilitated on our platform, which has reached RMB1.9 billion in the first quarter. We have also added 300,000 new customers to our ecosystem in Q1, which brings the total number to 8.7 million by the end of the first quarter. During the period, we have recorded a non-GAAP net profit of RMB18 million, which is a second straight quarter of profitability, putting us on track to meet the full year non-GAAP net profit guidance of RMB30 million, which we have given out to the market last quarter. This success can be attributed to the successful execution of our key business strategies. Firstly, we continued our strategic focus on long-term insurance products, with the GWP contribution from long-term products remaining at about 90% for the 14th consecutive quarter. Secondly, we continue to target high-quality new generation consumers and empower insurance agents throughout our omnichannel distribution platform, extensive product offerings and advanced technology. Our To-A, To-C business line generated a very solid quarter with total FYP of RMB75 million alone in the first quarter, representing a year-over-year increase of over 400%. And lastly, we continue to focus on cost efficiency enhancements throughout the organizational structure which leads to further cost savings an…

Thank you. [Operator Instructions] And the first question comes from the line of Yuyu Zhang [ph] from CICC. Your line is open. Please ask your question.

I’ve got two questions. And the first one is about the current product mix. So could you give us some more details on the product mix based on FYP in the first quarter? What’s the proportion of saving products? And the second one is about the growth momentum. We know that previously, China’s insurance regulator has offered insurers to lower estimated times for newly launched products. So what’s our savings product sales momentum in recent weeks? And we noticed that you’ve mentioned in earlier conference call that the company saw a mild recovery on long-term health product sales in the first quarter. And now we are at the end of May. So is there still a recovery? Thanks.

Thank you, Yu. It’s Kwok here. So regarding your first question on the FYP product mix in the first quarter, I think that we can break it down for you. So we have a total of RMB661 million of FYP. And of that, roughly RMB180 million is coming from protection, so coming from long-term health and term life products. So that RMB180 million number represents about 32% quarter-on-quarter growth. So that will give you some sense of the recovery in the long-term health space and RMB340 million roughly is from the long-term savings segment, which includes the increasing whole life category and also the annuity category. So, that number has increased by 50% quarter-on-quarter versus Q4. So roughly around 28% of the FYP in Q1 is from protection, roughly 51% of the FYP is from long-term savings. So that will be the product mix question. With respect to the second question on the downward revision on the so-called guarantee return from 3.5% to 3.0% trend and how that impacting sales. I think what we have seen in the second quarter is we are actually seeing increasing momentum of sales in the second quarter with respect to probably imminent transition to the 3.0% product pricing. So I think Q2, we should probably expect to see a larger increase in sales of this product versus quarter one. But then going forward into the second half of the year, what we have seen in quarter two as well to date is that we are seeing a pickup in annuities especially in China, is calling [indiscernible]. So this category is actually picking up the momentum. And in the second quarter, we’ve seen that the momentum should probably be continued towards the second half of the year when I think the market transitions from the…

Thank you. [Operator Instructions] And the next question comes from the line of Amy Chen from Citi. Your line is open. Please ask your question.

This is [indiscernible] from Citi. And first, I want to congratulate the management on such a robust sequential growth in the first quarter. So my first question is regarding to the increase in whole life products. I’m just wondering, with percentage it accounted for in terms of FYP and GWP facilitated in the first quarter as well as year-to-date. And going into the third quarter and the fourth quarter, what kind of product mix are we looking at? And the second question is on brokerage income. If we look at it on a year-over-year basis, it’s actually relatively flat. But actually, we locked a very robust FYP growth in the first quarter. I’m wondering whether this has something to do with your TO-A channel independent agent channel? Thank you.

Okay. Thank you. So the two questions. I think the first question we have touched upon in the response to the question just from CICC. So the increasing whole life product in the first quarter, I think in terms of our public disclosure, we have lumped together the long-term savings product categories, which includes the increase in whole life and annuities as a whole. So this category has accounted for 51%, 51% of our FYP for the first quarter. And if you are asking about the outlook for the rest of the year, I think in Q2, we probably see a higher proportion of FYP coming from the increasing whole life/annuities categories, probably more than 51% in the second quarter. But that would come down in the second half as we transition to the new product pricing landscape, as we all know, from 2.5 to 2.0. So in Q3, we will see probably relatively weak sales of long-term savings in the increasing whole life segment. But then we do see that a complementary makeup from the annuities product as we see that the growth momentum in the annuities category continues to be quite strong. in Q2 year-to-date. So second question on the brokerage income, yes, we do acknowledge that the year-on-year growth on the brokerage income side is going to be flat. I think that has to do with mainly the lower commission rate [indiscernible] with the savings product category from – this quarter versus the same quarter last year. So I think that the take rate decrease has been the main contribution factor to the rent flat performance in brokerage income from last year to this year.

Thank you.

Thank you. [Operator Instructions] And the next question comes from the line of [indiscernible] Securities. Your line is open. Please ask your question.

My first question is, you mentioned that you have deployed an online purchase offline service strategy. So could you elaborate more on this strategy and what do you aim to achieve with this strategy? And my second question is your major peers have moved towards creating health and insurance or medicine and insurance to facilitate customer acquisition. So what are your key customer acquisition strategies? And how do you plan to optimize your customer acquisition cost? Thank you.

Okay. Thank you for your questions. So with respect to the first question on the online/offline strategy, I think we have been telling the market for quite some time by now that we have always wanted to pursue an integrated model with online customer acquisition and offline customer service comprehensive kind of strategy. And this year, we will be able to accelerate the development of this finally after the post-COVID era where we can really push things on the ground and to deploy human resources over the country. So by now, we have already deployed significant human resources on the ground in over 17 potential areas in China. So, with respect to the specific locations, in addition to your traditional Tier 1 and other Tier 2 cities, which we all know and which will be necessary coverage for us already. We have further expanded our geographical coverage to places like Hubei, Jilin, Jiangsu, Zhejiang, Hainan. So these areas are also representing the top 20 GDP per capita regions of China, and these are the important areas where we want to expand our off-line coverage from a services standpoint. So to put expand on our strategy, I think we have already accumulated 8.7 million customers, paying customers on our platform. And we have reached to a point where we want to further improve our ability to service these customers and to further try to upsell these customers for higher-value products, which includes insurance products, which also includes other products for example, healthcare services, eldercare services. And with the offline locations, we are now able to have a face-to-face interaction with these high-value customers that we can try to upsell and therefore, we will be able to further maximize the long-term value of the LTV potential of these high-quality customers, which we…

Thank you. Dear Speakers, there are no further questions at this time. And I would like to hand the conference over to our management team for any closing remarks.

Thank you, operator. So 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 still to reach out to the IR team and thank you for joining us today. This concludes the call.

Thank you everyone.

That concludes our conference for today. Thank you for your participating, you may now all disconnect.