Fanhua Inc. (FANH) on Q1 2021 Results - Earnings Call Transcript
Operator: Thank you for standing by for Fanhua's First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent background noise. After the management's prepared remarks, there will be a question-and-answer session. Please follow the instructions given at the time if you'd like to ask a question. For your information, this conference is now being broadcast live over the internet. Webcast replay will be available within three hours after the conference is finished. Please visit the Fanhua's IR website at ir.fanhuaholdings.com or the event and webcast section. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over the host for today's conference Ms. Oasis Qiu, Fanhua's Investor Relations Manager.
Oasis Qiu: Good morning. Welcome to our first quarter 2021 earnings conference call. The earnings results were released earlier today and are available on our IR website as well as on Newswire. Before we continue, please know that the discussion today will contain forward-looking statements made under the Safe Harbor Provisions of the US Private Securities Litigation Reform Act of 1995. The accuracy of the statements may be impacted by a number of business risks and uncertainties that could cause our actual results to differ materially from those projected or anticipated. Such risks and uncertainties include but not limited to those outlined in our filings with the SEC, including our registration statements on Form 20F. We do not undertake any obligation to update this forward-looking information, except as required under applicable law. Joining us today are our Chief Executive Officer, Mr. Chunlin Wang; Chief Financial Officer, Mr. Peng Ge, and Board Secretary, Lily Lee. Mr. Wang will provide a review of our financial and operational highlights in the first quarter of 2021. There will be a Q&A session after the prepare remarks. Now, I'd turn the call over to Mr. Wang.
Chunlin Wang: For the first quarter 2021, we're going to get the estimate with solid results. For the first quarter of 2021, with estimate RMB3.1 billion total gross income of 27.9% year-over-year, which first quarter associate premium grew by 57% year-over-year to RMB892.7 million. As equity remains strong with 13 months persistency ratio at over 91%. As a result of the stellar growth in life insurance business, our net revenues which RMB1.1 billion representing a growth of 51.5% year-over-year and operating income of RMB144.4 million at 133.8% from a year ago. Net income attributable to shareholders were RMB138.4 million, up 222% year-over-year. China's life insurance industry remains gloomy as it undergoes the reform and transformation, which pose both challenges and opportunities. There has been a fundamental change in customer demand in the past six years since the life insurance pricing liberation with the rapid growth in a number of self-agents in China and the emergence of the internet channel, the penetration rate of health insurance products in China have been relatively high. The popularity of government-backed medical insurance in recent years has also saw a large portion of demand for health insurance products and the road is upside potential for commercial long-term health insurance in China.
Operator: Thank you. Your first question today comes in line of Ying Ma from CICC. Please go ahead.
Unidentified Analyst: Thanks for management, essential management. First of all, congrats for the exciting results. We have seen some negative effects caused by the of critical units definition among peers. When do you think this effect will fade away?
Chunlin Wang: To transition from the old critical illness definition from work, from the old one to the new one, is a bit event for the industry overall and also have caused a huge impact. Before the suspension of the old critical illness products in February the first, there has been strong sales in critical illness products in January. There has been a particular characteristic in the Chinese life insurance market, which is that every time before a suspension of a product, there will be a strong sales followed by a low down for a period of time. This time, it has no exceptions and in addition to that, we believe that initiation rate for critical illness products is relatively high in China. As of date, there has been 300 million outstanding critical illness policies in China. Apart from that, recently, the government has rolled out some short-term medical insurance products, which is more affordable and this type of product has also become quite popular among consumers, which in certain ways also absorb some of the demand for critical illness products.
Operator: I see that we have no further questions on the line today. Now I can go back for closing remarks.
Oasis Qiu: Thank you for participating in today's call. If there any further questions, please feel free to contact us. Thank you.
Operator: Ladies and gentlemen, that concludes our conference for today. We thank you all for your participation. You may now disconnect.
