Good afternoon, ladies and gentlemen. Welcome to the CPIC Group 2026 interim results announcement.

I'm Su Shaojun, CPIC Group Board Secretary. It's my great pleasure to talk to the investors, analysts, and friends from media about our performance and business in 20 first half of this year, and also to listen to your views on us.

To protect the interest of small- and mid-sized investors, we are conducting this event online and offline so as to cover more investors. After the meeting, you can also view this view the view the view playback.

You can access the playback of this event from on our website. Now, let me introduce the executives: Mr.

Zhao Yonggang, CPIC Group President; Mr. Su Gang, CPIC Group Vice President and CFO; Mr.

Cheng Hui, CPIC CPIC P&C General Manager; and also Mr. Li Jinsong, General Manager of CPIC Life.

Our independent directors will also join this event on offline on offline and online. Mr.

Zhao Yonggang, our President, will give you an introduction of our performance in the first half of this year, to be followed by a Q&A session.

Good afternoon, ladies and gentlemen, friends from the investment community and media. It's our great pleasure to meet you.

In the first half of the this year, in a very complex and fast-changing environment, we stayed focused on our core business of insurance, seized the opportunity arising from China's demographic demographic change, industrial transformation, and also application of AI technologies. On the overall, we delivered a steady improvement in overall operating profit and sustained growth in comprehensive strength.

To give you some numbers: our group operating income amounted to 212 billion, up 5.8% year on year. Group OPAT reached 21.1 billion, up 6.2%.

Group net profits reached 30.8 billion, up 10.4%. Net assets attributable to parent's shareholders stood at 319.2 billion, up 5.6% from the end of 2025.

Our new business value of life business grew 12.7% year on year, and the combined ratio of P&C business improved by 1.3 percentage point. Our group AUM surpassed the 4 trillion mark for the first time, and our comprehensive our core solvency margin remained well above the regulatory requirements.

We have been improving disclosure of operating profit. Following the implementation of the new accounting standards, net profit has become more sensitive to capital market movement, and OPAT presents a clearer view of the company's long-term operating performance.

In recent years, our group OPAT maintained steady growth. In the first half of this year, OPAT from life business was 15.9 billion, up 5.9% year on year, while P&C business reached 3.6 3 6.3 billion, up 26% year on year.

On the issue of contractual service margin, well, CSM is a key financial indicator. It reflects the sustainability of the future profit.

Our CSM has continued to grow since 2023, reaching 368.8 billion at the end of the first half of first half of this year, up 3.3% from the end of 2025. By the end of June this year, our group net assets stood at 319 billion, up 5.6% year on year.

This is achieved on the back of steady profit contribution and a solid foundation in net in asset liability matching. We have also had a solid capital position.

At the end of June this year, the comprehensive and the core solvency margin ratios were well above the regulatory requirements. We committed we are committed to shareholder returns with a clearly defined medium- and long-term dividend policy based on dividend policy based on operating profit.

Since 2007, we have distributed a total of 130 billion yuan in cash dividends to the shareholders. For the first half of this year, we optimized the dividend distribution arrangement and implemented a interim dividend for the first time, with an interim DPS of 0.42 yuan and a total interim dividend amount of 4.04 billion, further enhancing investors' experience.

Next, I'll talk about the performance of our life business, P&C business, and also asset management business. For the life business, we remained committed to value growth and focused on regular premium business.

We saw steady improvement in business quality and operational efficiency. To be specific, the written premium reached total written premium reached 190 billion, up down 0 1.6% year on year.

Regular FYP amounted to 30.7 billion, up 28%. The 13-month and 25-month persistency ratio were 96.8% and 94.8% respectively.

In terms of new business, our NBV for the first half of this year grew 12.7% to 10.8 billion yuan. This was mainly driven by the agency channel.

In terms of NBV margin, it improved by 2.5 percentage points year on year to 17.5%. On the agency channel, we strengthened the systematical capacity building, which includes conducting customer engagement under multiple scenarios and driving the upward shift in the customer mix, and also provide differentiated insurance and service solutions, and also try to build a agency sales force of professional, career-based, digital-savvy younger agents.

To be specific, our monthly average agent headcount was 183,000, and our FYP per core agent and the monthly average FYC per agent both achieved double-digit growth. Our AI+ strategy also played a positive role in supporting our agents.

For example, we launched the Xiao Lan, a AI agent to empower our sales agents. Actually, the average number of agents using Xiao Lan was nearly 90,000, and those who use Xiao Lan frequently saw increases in in the FYP per agent, FYC per agent, active ratio, and the average number of long-term policies.

Now, these indicators have all improved by double digits. For the bancassurance business, we strictly implemented regulatory requirement for consistency between filed and actual expenses.

Also, we adhere to the value-oriented strategy. To be specific, our FYP regular FYP growth from bank channel picked up quarter by quarter.

Now, the number of active bank outlets managed by RP business was nearly 5,000, up 4.9%. The average regular premium per active bank outlet reached nearly 300,000.

We also have a Jianxiang Jia, a health management program for bank channel customers. Actually, the number of requests from Jianxiang Jia by mid-tier customers was above 10,000 in the first half of this year.

Pacific CareHome is also a brand for premium retirement community. It also helped to maintain customer relations from the bank channel, and nearly 30% of total FYPs are generated from by using this platform.

The share of mid-tier customers and above increased by 6.6 5.6 percentage point to 34.2%. The agency channel focused on mid-tier and high-net-worth customers.

In terms of product strategy, we continue to advance investment innovation in variable products. For example, the written premium for par business reached 65 billion, up 76% year on year.

The participating business as a share of total FYPs rose to 55.5%, which was up by more than 160% year on year. In terms of the strategy on the P&C side, we continued to support national strategies.

In the first half of this year, we achieved a steady premium growth on top of optimization of business mix. To be specific, its direct written premium reached 114 billion, up by 1.4% year on year.

The premium growth for the second quarter was 3.6%, much better than the first quarter. In terms of the auto insurance, because of the decline in new sales car sales in China, our DWPs from auto insurance was 53 billion percent, up by 0.2% year on year.

Non-auto DWPs was 60.6 billion, up by 2.5% year on year. We continue to focus on quality and profitability to strengthen underwriting discipline and expense management.

In the first half of this year, the combined ratio of P&C was 95%, down by 1.3 percentage points, and of which the loss ratio was 68.7%, down by 0.8 percentage points, and the underwriting expense ratio was 26.3%, down by 0.5 pts. You can see our underwriting profits grew by 35.7% year on year.

In terms of our capacity building, we continue to make efforts in this regard. As we mentioned, the underwriting combined ratio of our auto insurance was 94.6%, down by 0.7 pts, and the under expense ratio improved by 0.7%.

We continued to improve precise management so that our auto insurance renewal rate was 79.2%, 2 percentage points better year on year. We also continue to accelerate the development of new energy vehicle business.

Its growth in the first half of this year was 20.9%, and its total share in it was 23.9%, up by 0.1 percentage points year on year. In terms of business mix, we continue to improve business mix and advance to the risk reduction system.

For non-auto insurance, the combined ratio was 95.3%, improving by 2.3 percentage points. The top four non-auto business lines produced underwriting profit profitability.

Health insurance and the liability insurance maintained the healthy growth. To be specific, health insurance recorded 17.1 billion in DWPs, up 10.4%.

The liability insurance recorded 13.7 billion in DWPs, up by 6.6% year on year, and underwriting combined ratio improved by 0.4 percentage points year on year. In terms of asset management, we continue to adhere to the principle of value, long-term, prudent, and responsible investment, strictly followed ALM requirements to improve our SAA, and we continue to refine our dumbbell-shaped asset allocation strategy.

By the end of June this year, our G our AUM maintained the steady growth and surpassing 4 trillion yuan for the first time. Our investment asset include investment asset grew by 4.4%, and the AUM grew by 6.3%.

Of this, equity assets improved by 7 was the share of equity assets was 17.1%, up by 0.4 percentage points, and the core equity investments was 13.9%, down by 0.5 percentage point, and the debt financial asset stood at 71.4%, down by 1 percentage point. We continued to explore opportunities in alternative instruments such as REITs and ABS, and we continue to explore a new model for diversified asset liability matching centering on net investment yield plus.

We continued to track the matching of liability costs and asset return across multiple levels based on a live numbers. Maturity investment yield on the new fixed-income investment covered guaranteed interest rate on new policies.

The three-year average net investment yield covered the guaranteed interest rate, and the three-year average comprehensive investment yield covered the cost of liabilities, which help us to maintain a reasonable safety margin in ALM. We also continue to optimize fixed-income asset portfolios and increase allocation to long-term government bond.

Now the average asset duration of our fixed-income investment reached 11.7 years. In the first half of this year, we see a structural divergence for the capital market, and the long-term long-term risk-free interest rates stayed at low levels.

We proactively seized the structural investments investment opportunities and also maintained a margin of safety to manage the downward trends in a volatile market. The net, total, and comprehensive investment yields were 1.5%, 2.4%, and 1.8% respectively.

The market price of our dividend value equity portfolio experienced significant fluctuations, which led to a short-term pressure on our comprehensive investment yield. On the long run, we can navigate market cycles and maintain comprehensive competitive comprehensive investment yield.

In terms of credit risk management, our enterprise bond holdings and the financial bond holdings issued by non-government-sponsored banks maintained a high debt and issuer credit ratings. Investments in non-public financing instruments as a share of total investments further declined.

That is the my numbers and performance of our core businesses lines. To sum up, I would say the international market is quite complex and challenging.

In domestic side on the domestic side, we China is also restructuring its economy. The government is also trying to improve safety, social safety net, and the people's livelihood, which will create more opportunity for the insurance industry.

We will strive towards this vision of a top-tier insurance service conglomerate with market leadership, international competitiveness, and overall strength, and continue to create value for shareholders, customers, employees, and society. We are going to further improve the quality and the productivity of the agency channel, sharpen the competitiveness of regular premium business of bank channel, and in terms of the P&C business, we will put profitability first, continue to strengthen business quality control, improve catastrophe response mechanism, and improve risk reduction so as to have a sustainable growth.

In terms of risk management and asset management, we will uphold the long-term thinking, persist in ALM, and seize investment opportunities to generate steady, sustainable investment return. That concludes my presentation.

Thank you.

Thank you, Mr. Zhao, for your detailed presentation.

Now we will open the floor to questions. Now you can also raise ask questions over the telephone and also online.

Please ask no more than two questions. We'll have some questions on-site.

Thank you for the opportunity. I'm from Guotai Haitong Securities, Liu Xinqi.

Congratulations on your steady performance. I have two questions on the liability side.

About the new requirements from the regulators. Now, what's your NBV outlook?

Because for the you see for the first half of this year, your NBV, NBV achieved the double-digit growth. What about July onwards?

With Document 65 from the regulators, we saw some pressures from well, on the market in terms of premium growth. What is your NBV outlook for the second half of this year and also for next year?

Second question regarding payment liability structure. Now, a lot of insurance pay a lot of attention to the growth of well, par life.

Now, your share of par business is already 55%. We believe given the low interest rate, the too high a share of par life is not necessarily a good thing, because in terms of well, sometimes you should utilize traditional insurance to so to to secure low liability cost.

What is your plan for your participating business? Because if the customer prefers participating life, are you going to how are you going to allocate and maintain the balance between par and balance and the traditional business?

Thank you for your question and your and your attention. Now, first of all, regarding your question on NBV, now, I believe first of all, if we look at the first-half numbers, Mr.

Zhao has men has give you a lot of numbers. In the first six months, I believe CPIC, well, our second-quarter business was better than the first quarter.

I believe CPIC is quite unique in this regard. Now, if we look at the first half of this year, I believe we're going to pursue NBV growth from several areas.

Continue to improve customer segmentation. Secondly, improve product mix, product structure, for example, by promoting protection-type business, for example, this kind of long-term care products.

This products, well, grew very popular on the market. On the other hand, we also improve the share of our participating insurance.

Also we focus on developing our team. Our well, I mean back office managers, for example, the building and developing of these managers.

Also on the front line, our agency team also is improving, for example, by becoming more professional, by becoming more digitally savvy, younger, et cetera. Our agency team is also improving.

If we look at the bank channel, we are always improving, building this kind of a high-quality bank channel team so that we can have more opportunity for the bank business development. We also improve our refined development refined management.

We focus on value growth. We focus on efficiency.

Also, we promoted this kind of a AI or digital empowerment, for example, the AI+ strategy. It's a key priority project for CPIC.

CPIC Life is, well, is actively promoting our AI digital strategy, for example, by improving our processes and procedures. In terms of claims settlement, underwriting, we are also adopting AI tools, improving the AI empowerment so that we can achieve further growth in value, and also we strengthen our risk management and compliance management.

All these factors made it possible for us to grow for that two quarters of the first half of this year. Of course, there are regulatory trends, regulatory changes.

There were there are pressures for next year, for the second half of this year. This is a issue for the whole industry, but on the whole, we are quite optimistic about our business perspective outlook.

Now, first of all, in terms of the timing, if we look at the last three years, you see NBV grew quite fast for for us. These are all double-digit growth for the last three years, we believe we are sustainable in terms of the timing, in terms of the pace of business, and also in terms of our strategies.

We are quite balanced in terms of meeting customer needs and keeping up the seasonality or business pace. If we look at our team, we have Currently, we we focus too we we still have room for improvement in this kind of a tier 1 cities.

In terms of bank channel, we focus more on tier 1 city rather than well, tier 3, tier 4, smaller cities. Bank channel strategy is different from the agency business, they complement each other, I mean the two channels.

In terms of the growth model, we, on the one hand, promote agency and the bank channel, and we also now are developing our worksite marketing. I believe based on all these, although we have a quite high baseline, we we are still optimistic.

Secondly, in terms of the liability for CPIC Life, we we actually set or anchor our liability cost based on our products. For example, we are promoting participating insurance since the second half of last year, and we saw very good results.

Going forward, how are we going to approach this? I believe, as a big insurance company, first of all, we need to meet customer needs.

On top of that, we need to improve our liabilities. In the second half of this year, in terms of our product strategy for the agency channel, since we will have more higher-end customers, we are going to promote a whole life participating products and a whole life incremental life.

For the second half of the year, we are going to meet the different needs from different customer segments. While focusing on participating life, we are going to also balance it with traditional life.

For example, also long-term care products will be launched. On the one hand, long-term care products will be combined with participating annuity, and we are going to launch this kind of government-tax-sponsored long-term care products.

To better serve our customers, we are going to promote CPIC medical medical insurance, working together, CPIC Life and the CPIC Health working together to promote the CPIC blue health insurance products to be sold via the agency channel. For the bank channel, we are going to focus on value, focus on high-end customers, participating whole life incremental products, and also participating annuity products so as to reduce our liability costs and better serve our customers.

Thank you. Now let's welcome the next question.

Thank you. I'm from Sun Ting.

I'm from Dongwu Securities. Congratulations on your solid performance both on the life side and the P&C side.

You improved your combined ratio by 1.3 pts. I have two questions.

Number one, as Mr. Zhao mentioned, give us a lot of numbers on on your performance, we're happy to see a lot of good numbers, but we'd still like to see what what's your view on your performance so far this year?

Also going forward, for for the industry as a whole, what are the changes and how are you going to respond to these changes? For the whole year, what's your annual target?

What's your view on the annual targets? Second question about the new regulatory rules.

Actually, on your slides, page 20 of your slides, we we we don't see specific numbers on page 20. Now, in terms of the new regulatory KPIs, how are you coping?

How What's what's What's your calculation on the on these new indicators? What are how you're going to do in terms of the asset side and the liability side?

Maybe I'll answer your first question. Thank you for your attention.

Now, I would say, in the first half of this year, we continued to seek progress while maintaining stability. Guided by the 15th year plan, we are actually delivering quite stable improvement in our key KPIs.

Our overall strength has also improved, especially given this kind of complicated environment. I believe I we we we have demonstrated a lot of resilience.

Now, if you want me to comment on the performance so far, I would say we we can see four features: number one, our core business is stable; secondly, we are seeing new we are we are seeing new momentum; and thirdly, we see better synergy; and fourthly, we see better technology empowerment. Now, for our core insurance business, we continue to focus on quality growth.

As we mentioned, our life business, our regular premium growth was very good, up by 28% year on year. NBV, NBV margin also grew quite stably.

Behind that, we would see the product mix and our customer mix also improved. Now, for the P&C business, our combined ratio improved, well, one of our best levels in recent years, now standing at 95.

90 95%. We also see a new energy vehicle also give us quite a steady growth.

In terms of asset asset management business, now, we are sticking to our long-term investment strategy. We focus a lot on SAA.

We remained disciplined and remained resolute on our SAA, and paid a lot of attention to our ALM, our investment performance was quite stable. Now, secondly, as we mentioned, we saw this kind of new growth momentum, new areas of growth.

Now, for example, we are actively promoting technology insurance, green insurance, and actually the premium income from technology insurance grew nearly 18% year on year. We also saw a lot of progress in terms of serving the new new new production force.

We our green insurance premium reached nearly 40 billion yuan. In terms of the health insurance, we are also developing our presence, expanding our presence.

Our commercial health insurance new premium grew by double digits. Also, we saw double-digit for the coverage of government-mandated long-term care insurance.

Our AUM in the first and the second pillar of pension schemes exceeded 1 trillion yuan. That's the second point.

Thirdly, better coordination and synergy, that is to say to better develop this kind of cross-selling and synergy and coordination, we focus more on the customer orientation. For example, coordination between Life and the P&C subsidiary, and also integration of products and the services, and the asset and the liability coordination.

This kind of synergy and coordination helped to generate a lot of good results. Of course, we also cultivated our strategic customers.

We integrated our insurance, service, and investment sides. We've developed a series of strategic customers and major projects.

You can see the number of multi-policy customers and the rate of cross-selling both rose steadily. Fourthly, oh, we strengthened the technology empowerment to boost the quality and efficiency of our core business.

For example, we are actively promoting AI+ strategy to, well, put in place our vertical domain large models. We're happy to see the rollout of some of the key projects.

For example, as I mentioned, for the life business, we launched the Xiao Lan agent, AI agent for our sales agent, for our life agents, and we also launched the projects to help P&C business to better manage its claims. Also, we paid a lot of attention to data security.

We are the first in China to pass the data security capacity maturity model, DSMM level four certification. I would say, if we look at the first half of this year, I believe these four points stood out.

Of course, the industry is developing quite fast with a complicated backdrop. CPIC has maintained steady growth.

We are serving the real economy and the people's well-being. Given this, we we do see some opportunities.

For example, for life business, we believe our life products has become a very important tool for people for for household wealth allocation. For example, variable variable insurance sold very well, and this also improved the company's liability cost.

Now for auto insurance, well, new energy vehicle insurance supported our premium growth. This development of a new productive force and the green transition reinforced our role as an economic shock absorber and social stabilizer.

On the investment side, structural divergence in the equity market increased volatility. It will have a notable impact on our profits.

On the regulatory front, tight supervision continued. It well, it is guiding the industry towards long-term, healthy, and high-quality development.

For the first for the second half of this year, CPIC will continue to pursue high-quality growth. We need to focus on three areas: number one, we need to serve China's 15th five-year plan and seize new opportunities.

For example, we need to align ourselves with the government's big strategies, and also the development of the industries, for example, the technology innovation, green development, and shipping safety, etc. On the other hand, we also need to focus on areas, for example, health and elderly care for the key population groups so that we can uncover opportunities in new fields and new models.

Secondly, we need to focus on improving the quality and efficiency of our business insurance business. For the life business, for the life side, we need to coordinate product and the channel strategy, accelerate a breakthrough in key areas, and improve customer segmentation to drive sustainable sustained value growth, and also improve a high a high-quality sales force and diversify profit sources profit sources.

For the P&C business, we need to consolidate our business base and seize opportunities in key areas, for example, this kind of new areas. On the investment side, we need to improve long-term mechanism for asset liability coordination and better respond to, for example, regulatory rules, new rules, strengthen our investment research, diversify asset allocation strategy so as to deliver stable and sustainable returns.

Thirdly, we should also advance our three core strategies or priorities and build core competitiveness. For example, our big healthcare strategy, we need to improve product innovation and model optimization.

In terms of internationalization strategy, we should focus on improving overseas capability and strengthen our Hong Kong operations. For the AI+ strategy, we should accelerate the R&D and large-scale deployment of high-value AI applications.

This is, you see, this can speed up digital, intelligent transformation and also help to empower our business. To sum up, I would say we should remain committed to these principles.

We should pursue higher quality, better resilience, a more solid foundation, and more breakthroughs for our business so as to better meet our annual targets. Thank you.

Thank you. I'll answer your second question, and maybe I'll just add a little bit.

Now, the new rules on asset liability for insurance business received a lot of attention. I would say it, well, it will have a very profound impact on insurance business, asset allocation, asset management.

Now, this new regulatory document is a it's it's like a combination of previous rules. It's now very comprehensive.

Now, I would say we should focus on four areas, because first of all, it focused on the governance of insurance companies. Secondly, it enhances the quantitative indicators, and thirdly, it broadened the evaluation horizon.

Now, actually, before the document officially released, we have been actually making preparations for the forthcoming rules. For example, we we we studied the pre preliminary documents, we have been a participant of relevant seminars and studies for the industry, and we are also trying to revise relevant data reporting mechanism so as to meet the new requirements.

Now, given this kind of regulatory indicators and monetary indicators, I would say Life and the P&C, we are doing both are doing quite well. For example, for P&C traditional account, our coverage ratio was 115%, and for life business, the interest rate hedging rate ratio is more than 80%.

Other indicators, we also scored quite well. If we look at these indicators, if you want to see the future performance of CPIC, you can look at the stress testing, you can look at the metrics, parameters, for example, during the stress testing, equity asset reduction, we are for 1 year to 3 years, I believe that that that is a tall order.

For CPIC, our SAA strategy is already aligned with regulatory requirements. I believe these indicators will be more under control going forward, especially for the life business.

For the liability side, you can see it's very diversified. Also, on the asset side, China's interest rate is going downwards.

We have long been discussing or studying this. Now, for example, we have come up with a net investment yield plus strategy.

Now, because the life business has very long liability, it's very long, fixed liabilities, we need to take a holistic approach. We need to consider a lot of factors so that we can come up with a more refined, more consolidated tools, platforms so as to better coordinate assets and liability matching.

We believe we should start from product. We should anchor against the liability and drive asset allocation on top of that.

For SAA, we need to be prudent. We need to be resolute.

We need to have a diversification and differentiation. For TAA, we need to be more dynamic so as to cope with the rapid changes of the market.

We need to be disciplined. We need to be controllable so that the long-term investment yield can better cover our liability costs.

In terms of fixed income, we will remain more timely to seize very fast these allocation opportunities so that our interest bond can give us good results. We also look at the opportunities, this kind of new emerging opportunities, alternative opportunities.

We need to consider the valuation and the market structure so as to adjust our allocations so that we can improve our long-term return and also improve our multiple manager approach. Of course, we will further improve in alternative investment in terms of equity investment and other kind of alternative investment.

On the whole, based on the new ALM requirements, we are going to improve our internal structure, internal organization with with adjusted KPIs, evaluation mechanism, et cetera, so that we can meet new new regulatory rules.

Thank you. Let's welcome the next question.

Thank you. I'm Deng Shaoyi from Securities Newspaper.

Now, you have for the first time you have interim dividend. What are the factors you considered, and what's the overall yearly outlook, and do you have any future plans?

Thank you. Now, as you see, this year we optimized the structure of dividend payout and launched for the first time the interim dividend.

We want to make it long-term so that we can, well, improve the cash return for our investors and improve their experience. Now, interim dividend is a very important part of our annual dividend payout.

We anchor against OPAT, and also consider this kind of solvency ratio, and also the, well, needs of investors so as to decide a ratio between interim dividend and year-end dividend. For example, this time we're going to pay out 0.42 yuan per share.

If we calculate by OPAT, the ratio is 19%. Now, this ratio, well, is comparable against peers.

If we calculate by net profit, then the dividend rate is 13.1%. Now, this number is higher than most of our peers.

Regarding the total year dividend, first of all, our long-term and mid-term dividend payout policy is quite stable. That is to say, we look at our OPAT, we look at our solvency, we look at our business.

Secondly, now, life CSM and spread and P&C profitability, underwriting profitability are key factors for our dividend payout. I believe these factors will continue to grow stably going forward.

I believe we pay a lot of attention to return to customers to investors. We are confident we can deliver stable, long-term, foreseeable return to our investors.

Thank you.

Let's continue the questions.

Thank you for the opportunity. I'm Gao Yunxiang from Zhonghai Securities.

Now, two questions. Number one, on the issue of aging, some other insurance companies are making inroads into elderly care products.

What's your efforts in the retirement and elderly care area? Second question on on the financial on the financial numbers, we can see tax your your income tax is going down for the first quarter.

Now, this is particularly evident for the life business. Could you tell me something about the reason for a reduction in income tax?

Thank you for your question. Now, to answer your first question regarding the population aging and our response, as you mentioned, as China's population ages, now, China is also promoting a health strategy.

The people in China are having more and more higher requirements for retirement and retirement and elderly care services. Now, these present us with more opportunities.

For CPIC, I would say we we are quite consistent in our big health strategy. For example, 5 years ago, we have more than 5 years ago, we launched the big health strategy.

Now we upgraded it to the big health and wellness strategy. We are actually making it one of our top three strategies.

In terms of the targets for this strategy, I would say we need to build a a integrated health and wellness ecosystem, strengthen the synergy between insurance, investment, and and wellness service, and promote joint growth, scenario integration, and value co-creation. This is the key target for our health and wellness strategy.

If we look at the first half of this year, I would say we have made some progress in line with our expectation. We continue to enhance top-level design, coordinated management, and the talent management at at each level.

We for example, we have trained our people. We have built relevant mechanism.

I would say our health and wellness strategy has saw very good results. Also, it has brought very positive impact on our insurance business.

I would say we have made three big throughs. Number one, in terms of promoting the coordination between health insurance and pension business.

For example, we accelerated the product innovation and iteration for health insurance. Our premium for commercial health insurance policy grew by 16% year on year.

The number of people covered by government-mandated long-term care insurance increased greatly. We also seized the opportunities from new health insurance regulations, and are developing products such as individual account medical insurance and participating health insurance.

In terms of pension business, we made arrangements across the three pillars of pension with a focus on enhancing pension investment returns. For example, the cumulative returns of Changjiang Pension's single fixed income portfolios, single equity-linked portfolios, and collective fixed income portfolios have all ranked among the top in the market.

Also, we are happy to see that the asset under management for the second quarter for the second pillar, enterprise annuity surpassed 1 trillion yuan for the first time. The second breakthrough is was in terms of elderly care and rehabilitation.

For example, our CPIC Home, our that that is our premium retirement community, now we have 14 of them in operation. We have more than 3,500 long-term residents, and more than and nearly 350 of them of those residents are suffering from dementia.

We also are actually making progress in terms of light asset projects. We also have this kind of a Bai Sui Ju program.

By leveraging this Bai Sui Ju program, we we have we can have smart service devices for data collection and management. To date, it has served over 100,000 customers.

We also have built a direct billing medical network across China, which now covered 1,210 vendor medical vendors. This covered 83 of the top 100 hospitals on the Fudan China hospital list.

The Guangci CPIC International Hospital Alliance has now grown to 158 member institutions. The third breakthrough is for the integration between insurance and service to boost the business and wellness ecosystem.

CPIC Life leveraged the elderly care community to enhance high-net-worth customer development. For example, for the first half of this year, the number of high-net-worth life insurance customers driven by the retirement program increased by 37% year on year.

For the P&C side, by utilizing the wellness eco by the wellness ecosystem's strength, our CPIC P&C improved auto insurance claim service. It helped to improve customer experience and also reduced the average claims payout.

For CPIC Health, we utilizes the Yipaitong, that is a one-stop medical treatment claims solution. To date, the Yipaitong has served more than 750 enterprises and 610,000 users.

Now, I would say, for the first half of this year, we have improved the quality of our health and wellness strategy. Also, we can see this also empowered our business.

In the second half of this year, we need to deepen the integration we need to implement our three top projects, strategies to deepen the integration of health and wellness service so as to better enable two-way empowerment between services and the core business so as to better serve our business and also our customers. Thank you.

Now, let me continue to answer your question on the income tax. Now, of course, yes, our income tax actually declined.

This is mainly because of a decline in life business. Two reasons for that.

Number one, is in previous years, for the life business, it remained prudent in terms of accounting judgment. Because of that, actually, it does not record deferred income reduction.

Now, the government made it has confirmed that we should adopt the new standards so that, using the new standards, actually, we can claim full confirmation for deferred income deferred income income tax. Going forward, well, on the other hand, the government the company is making investment into government bonds, long-term bonds, these also add to tax deductibles.

Thank you.

Thank you. Let's welcome the next question over the phone.

[Foreign Language] If you want to ask questions via the telephone, please press *1 to queue, and then ask the question after confirmation. Please identify yourself and your employer before you ask questions.

Please ask no more than two questions. Now we have someone from from we have a question from Mr.

Zhou Zhen from Credit Suisse.

Thank you. I'm from UBS.

Thank you, and congratulations on your good performance. Number one question is about the investment.

Now, we see the market is quite divergent for the first half, and you you you demonstrated the resilience. Now, could you tell me something about the market, for example, the third quarter or so far the third quarter?

What what's your investment performance? What about this kind of high-dividend stocks and growth shares?

What's your view on that? For example, this kind of growth shares, tech technology shares, for example.

Second question, you see, you you your your actual numbers were better than expected in terms of growth, for example, OPAT. Now, could you tell me something about previously you have been surpassing your guideline guidance.

Now, OPAT, could you tell me more about the OPAT, for example, by Life, by P&C, and what's your overview or what's your out out view for OPAT? Now,

maybe let me answer your questions. You asked actually quite a lot of questions.

Now, of course, you see investment yield is a very important, topic for for for us, because it will impact on our net profit. Now, CPIC pays a lot of attention to our investment yield.

Now, for the first half of this year, our investment yield, may maybe I'll give you some background. Now, we look at net, total, and comprehensive investment yields.

For the net yield, I would say, is within our expectation. It was down by 0.2 pts.

Now, it was because of a lot of factors. It's it's it's a it's not unexpected, for example, maturing of previously high-yielding assets, etc.

We manage reinvestment. We have a TAA so as to counter-set offset this kind of impact.

If we look at the absolute number, 1.5 non-annualized return, it's it's actually quite it's the best among our listed peers. Total investment yield grew a little bit, mainly thanks to TAA contribution, for example, the spread, the trading spread for stocks and also for funds.

The TPL also made some TPL assets also made some contributions. Of course, our comprehensive investment yield faced a lot of pressure compared to our peers.

I would say it's more like a real-life stress testing, especially for Q2. The stock market was quite divergent.

For example, the China stock index actually down was down by 14%. That's a very big reduction.

Also, our core equity strategy, well, faced a lot of adverse influence in a lot of dimension. For example, our underlying underlying equity is different from the K-type divergence.

Our A+H share strategy is also producing active effect. Thirdly, we are quite active in terms of managing equity, where we have more in equity and less on funds, mutual funds.

This is also divergent from the market trend in first half of this year. Fourthly, we are quite prudent in pursuing our investment portfolio.

If we look at the numbers for life business, our core solvency actually ranked number two among listed peers. Given this factors, these dimensions, these factors, our core equity strategy faced a lot of stress, but we believe this is a temporary thing.

It's a transitional thing. It's not for the long term.

For the net and total and comprehensive investment yield, if we look at them, I believe in the short term, you cannot be best in in in in all of them. Currently, we focus, first of all, on net investment yield, and also pay attention to total and comprehensive yield.

We believe sometimes it's inevitable that we might have a lagging comprehensive investment yield. Now, the peers have different pictures in terms of investment yields because of a lot of reasons, for example, their business, their solvency, their dividend payout strategy, etc.

If we only look at short term, if we just compare numbers in the short term, we don't believe it is it's comprehensive enough, it is adequate, it's it's meaningful. Now, for CPIC, we are mature, we are patient, patient patient patient funding.

We should stick to our principle. We should remain prudent and resolute.

Maybe it's a slow bull market, a long bull market. We need to be flexible and disciplined.

We should seize upon the kind of phasal opportunity on the market. Seize upon this kind of opportunity generated by transition, market transition.

For our CPIC, we now pursue multiple multiple asset managers strategy. Now, I believe this kind of multiple manager approach is quite unique on the market so that our long-term performance can be more predictable and stable.

I believe the resilience, well, the resilience of our strategy is under pressure, of course, this time. Of course, we we do see some drawbacks, for example, a lack of elasticity for our current strategy in this kind of K-type divergence so that, going forward, we can be more flexible, we can tap into the strengths of our internal investment managers and external asset managers.

Of course, we all know that, starting from July, the market also went through some changes, especially the rotation of the styles for equity. Now, there will be a rebalance between growth and value shares.

For H share market rebounded, it's good for us, and for mutual fund, the herding of mutual fund, the effect of herding of mutual fund is diminishing. I believe Q2's the negative impact of Q2 is also reducing, I believe these are quite good news for CPIC.

We know we as I mentioned, we care most about net investment yield, but that's not to say we neglect or ignore comprehensive or total investment yield. Regarding the whole year investment yield, we believe A-share market will become more balanced and earning-driven opportunities will be the main mainstay.

For H share, we believe its H share market will still focus more on high-dividend payout shares. Now, all these evolvement will be beneficial to CPIC.

We are going to look at the, well, the timing opportunities. We're going to improve to better select this kind of growth opportunities under its satellite strategy.

We are confident we can beat the indicators, beat the benchmarks so as to boost the total investment yield and comprehensive investment yield. I believe that is our outlook and comment on our investment yields.

As you mentioned, the issue about the profit, maybe I I I will also could you repeat your question about about the profit? Could you repeat that?

On OPAT. Now, for OPAT, now the drivers of OPAT is the CSM amortization is the key source, and also spread, and also P&C's underwriting profitability.

Now, for the first half of this year for Life, CSM improved by more than 4% year on year, and the spread still going up, and the P&C profitability, underwriting profitability also improved by 1.4%. If we look at them more in details, for Life, including Hong Kong, OPAT 15.8 billion; for P&C, OPAT 6.2 billion.

If we look at the yearly picture, CSM amortization will continue to grow steadily. That will be a main driver of OPAT.

For some of the regulatory guidance for P&C business, its underwriting profitability will continue to grow, thus contributing to group OPAT. In the long term, we are going to improve CSM growth so as to make it a underpin of our OPAT.

Although there might be changes in product mix, there will be some pressure. However, as the as the industry grow as a whole towards high-quality growth, we believe OPAT is on a good trend.

CPIC is the first echelon, first-tier listed insurance companies. We believe we are competitive in this regard.

Let's welcome the next question. [Foreign Language]

Thank you. I'm Li Jian from Huatai Securities.

Now, first of all, my comment on on on your performance, I believe CPIC is a balanced company in terms of asset liability and the liability side. Now, I have two questions.

Number one, for life business, your product margin is growing up. This is a, well, quite rare among your peers because a lot of margins, for example, because of the transition towards par life, margin will be under pressure.

How can you improve your margin? Is it sustainable?

Second question, on the P&C side, now, underwriting profitability is growing is is improving, loss ratio, expense ratio both improved for auto and non-auto business. Now around 95% combined ratio, can it be sustainable?

Thank you. Now,

thank you. Thank you for your attention.

Let me answer the life question. Now, in terms of margin, NBV, NBV margin are improving.

Going forward, we believe we're going to maintain stable margin. Now, how did we do that?

That's mainly thanks because thanks to several things. Number one, we stick to the regulatory rules regarding the integrity between reported and because filed and actual expense.

Secondly, we continue with customer segmentation. For this year, we can see we improved improved in this regard.

For example, we now can very accurately identify different segmented customer. For example, we launched a AI system to Well, previously, last year, we focused on improving customer customer experience.

This year, we now make improved the system to better identify different segments of customers, for example, better identify their different life cycles, life stages, etc., so that we can more actually more accurately pinpoint their actual needs and the differentiated business development for customers. For different segments, we have different approaches.

We can approach them online and then follow up offline. We have I have some numbers for you.

With this kind of customer relation development, we see some changes. Number one, for example, we have more more customers from bigger cities, and actually premium per customer increased by 3%, and more customers are pay are paying more attention to their protection.

Thirdly, for the issue of product, we are improving product structure. Several things here: in terms of the product format, we are making adjustment, for example, be it traditional or participating life; secondly, in terms of premium payment, 5-pay, 10-pay, now these 5-pay, 10-pay products are improving in terms of proportion; and thirdly, in terms of function, we are launching more long-term care products; fourthly, in terms of the horizon of protection, duration of protection, we are also expanding that; also, fourthly, we are improving the health and well wellness ecosystem.

The big health and wellness strategy is a top three strategies, top three strategy for CPIC Group. Fifthly, we are improving refined management.

We are trying to improve customer experience in this regard. Sixthly, we are continuing to improve AI or digital empowerment, digital empowerment.

We are going to further improve our NBV and NBV margin in from these angles. Now, let me answer your question on the P&C business.

Now, combined ratio for the first half of this year continued to improve this year, which now stood at 95%, down by 1.3 pts. Now, combined ratio, loss ratio, and expense ratio, they both improved, which is quite a big feat.

Now, the reasons, I believe there are three reasons: number one, we improved or adjusted our business philosophy. For P&C business, we remain compliant to focus on risk and quality business.

We focus not only on volume, but more on quality and efficiency. We implement our big targets, for example, by focusing on focusing on income, on profitability, on cash flow.

This is something we do on all levels of our business. Now, if we look at the business, daily business, we did two things: number one, we adjusted the structure.

Combined ratio, loss ratio was 0.8 pts. That is mainly because of we proactively adjusted adjusted our business, for example, personal credit guarantee business was terminated, and our risk re-exposure for this in this regard were basically removed by by this year.

Secondly, we cut our expenses, cut our costs. Our expense ratio was expense ratio was down by 0.5 pts.

We implement strictly implement regular requirement regarding integrity between filed and actual expense. In terms of our business operation, we continue to improve anti-fraud, anti- and also, we continue to improve the management of our vendors.

Of course, unresolved re- unsettled reserves improved by 3.3 pts. That is to say, we have a very good foundation for the overall improvement in underwriting profitability.

Another thing is that we are now improving our risk reduction capabilities, it's not only our risk management, risk compensation after accident occurred, we now move it forward to make it a more lifecycle, full-lifecycle. For example, we now collaborate with universities and other research institutes to do research on this kind of risk reduction.

For example, we have we are now developing a catastrophe reduction engine. By leveraging our own risk radar, in the first half of this year, we we have served more than 100,000 customers in terms of offering them anti-flood services.

We better reduced this kind of flooding risk flood risk, and offset this kind of impact from extreme weather events. Thirdly, we are developing a long-term protection mechanism, that is to say starting from talent, technology, and evaluation.

In terms of talent building, we have hired professional talents in especially biomedical sphere and autonomous driving, etc. We need to make our people more professional, have a more professional team.

At the same time, under the group strategy, we are put in place a relevant P&C scenarios, for example, AI application scenarios, claims claims settlement, AI customer service. I believe technology is playing a bigger and bigger role in reducing costs.

Thirdly, in terms of performance evaluation, we put efficiency first. We focus on compliance and risk management so that we have a better foundation for quality growth.

I believe the biggest challenge for P&C company is climate, climate change, uncertainty of climate risk. For example, El Niño, El Niño effect.

This round of El Niño effect, a lot of typhoons in China have given us more risks, not to mention this kind of storm and other kind of, well, landslide. It gave us some challenges, but we are still confident.

We will continue with our prudent strategy to address the challenges. On the whole, I I I believe we are improving our efficiency and the quality of business.

This trend will continue. We hope that with P&C company can make more contribution to the group as a whole.

Thank you for the questions. In the interest of time, we now end the Q&A session.

Before the meeting, actually, we solicited some questions from small- and mid-sized investors, and these questions were already answered previously, for example, regarding the mid-term interim dividend payout, product strategy, and also business outlook, etc., SAA, etc. We have already covered those questions.

If you have further questions, we can take it offline. For the online broadcasting, questions will be answered in terms of text messages.

If you have more questions, you can contact our Investor Relations team. That ends our meeting.

Thank you. Goodbye.