Good morning, ladies and gentlemen. Welcome to the CPIC Q1 results announcement.

I'm Su Shaojun, Board Secretary of the CPIC Group. Now, we have released our Q1 report.

In order to deliver our information in a more timely fashion, we hold this session. Now, we have with us Group VP and CFO, Mr.

Su Gang, and also Group Deputy Chief Actuary Xu Zheng, and CPIC Life General Manager Li Jinsong, and CPIC P&C Deputy GM, CFO, Board Secretary Lu Zhengbó. We will give a presentation on Q1 results, to be followed by Q&A session.

Good morning, everyone, and welcome to today's results announcement. I'm Su Gang, CFO of CPIC Group.

Next, I'll give you a brief account of our Q1 performance. In Q1 this year, CPIC focused on our main business and continued to enhance service and operational efficiency.

We delivered a insurance revenue of 70.2 billion, up 0.1%. Our profitability maintained a steady growth and delivered net profit of 10.04 billion, up 4.3% year on year.

Our operating profit after tax stood at 10.5 billion, up 3.6% from last year. Looking at our main business lines, CPIC Life continued to deepen its transformation efforts based on value growth, and have achieved steady business results.

We have strong performance in regular premium new business and new business value. In Q1, it delivered total premium income of 116 billion, and a total regular premium new business value of 18.9 billion, up 41.4%.

Our new business value was at 6.3 billion, up 9.6% year on year. If we look at the agency channel, we achieved stable growth and stable agency sales force.

We offered products and services, achieved remarkable results. For the bank channel, we focused on regular premium new business, optimized product mix, and implemented the premium rate compliance policy.

For our group and worksite channel, we explored new models of workplace-based services and continued to expand the coverage of inclusive insurance products. For P&C side, we enhanced the risk reduction efforts.

In Q1, its total premium was 63.02 billion, down 0.3% year on year. Auto insurance was 26.8 billion, up 0.1% year on year.

Now, for the non-auto business, it was down 0.5% due to business mix optimization at 36.1 billion. Combined ratio improved to 96.4%, improved by 1 percentage point.

For auto insurance, we strengthened and refined the quality management and deepened research on risk of our new energy vehicles. For non-auto business, we focused on serving national strategies, real economy, and people's livelihood to continue to optimize our product supply and service quality.

For asset management, we adhere to the principle of value investment, long-term investment, and prudent investment. Driven by SAA, we conducted a disciplined and flexible TAA, and implemented a refined dumbbell asset allocation strategy.

We continued to enhance our market insight and judgment, and to identify fixed income asset allocation opportunities. We continued to intensify active equity management efforts, and effectively elevate the allocation ratio of equity assets to promote the core and satellite allocation strategy.

By the end of the first quarter, the group's investment assets reached 3.12 trillion yuan, up 0.8 up 2.8% from the end of last year. Our non-annualized net investment yield was 0.7%, down 0.1 percentage points year on year, and the non-annualized total investment yield was 0.8%, down 0.2 percentage points year on year.

That's the end of my presentation. Now, we'll have the Q&A.

Thank you, Mr. Su, for your presentation.

I'm Sen Ting from Dongwu Securities. Congratulations on your strong performance, including the RP business premium from life side, and OPAT, and net profit, and also on the investment side, I believe you had a better than peers investment yields.

I have two questions. Number one, on the life side asset liability side.

Now, you see the regular premium business did well for life and for agency and bank channel. Now, what about the share of par life business?

The second question is concentration of risks, for example, the concentration of par life products. Now, you see the pricing rate is quite low, but the actual liability rate is quite high, the margin is low.

Now, how will this affect your product strategy going forward? That is the first question on the liability side.

Second, on the investment side, I believe in Q1 you did a pretty good job in terms of investment. Now, as we see, the macroeconomy is not good in China or in other countries.

What's your concerns about the interest rate movements, and also stock market, and also how will it affect your SAA, if any?

Thank you for your question. Number one, Mr.

Li, could you answer the first question on the life business?

Thank you. It is a very good question.

Now, as you see, as of the end of Q1 this year, the share of our par life business is at a proper level. It's quite high, I believe.

Now, it's quite high percentage of par life products, it's mainly because of the customer demand. Of course, the customer demand is affected by the capital market, by the bank interest rate, etc., and also affected by their personal preferences.

Now, of course, the share of our par life also is affected by our company's orientation, value orientation. Now, of course, different customer have different needs.

High-end customers prefer par life products, and the massive customer prefers fixed-rate products. We will take that into account to offer differentiated products.

In terms of the value orientation from the company's side, we continue focus on the value and profitability. We continue to offer traditional products, but we do it in an innovative way.

If we look at our asset and liability matching, we will look at our own capabilities and also do it in a prudential way so as to enhance our asset-liability matching capability so as to support the effective long-term competitiveness of our par life products. Now, as you mentioned, the margin might be affected by this high rate of par life products.

We're also looking into this question. Now, to us, of course, par life margin is lower than traditional products.

How should we address this issue? How to adjust, how to make sure that we have a healthy margin?

We believe there's still a lot of room for further adjustment. We look at the structure of the products.

Now, for example, the mix between par life and traditional life. Now, actually, during the last year, we moved from traditional to par products, but we can reverse the trend if necessary.

Secondly, if we look at duration of payment: 3-pay, 5-pay, 10-year, or 20-pay, that can also be adjusted. Thirdly, the products could be long-term, mid-term, or whole-life protection.

This is also room for maneuver. More importantly, we can also adjust the function of those products.

Now, presently, saving is the main purpose of those products, the margin is lower than normal average. If we focus on protection, more on protection, then the margin will be much higher.

We believe we will make adjustment in the four aspects I just mentioned so as to continue to enhance our product margins, which, in turn, will drive the value growth.

Thank you. Also, to answer your second question on the investment side, I believe China's economy actually achieved a sort of a recovery, and the PPI is also improving, the deflation expectation is reversed.

Especially, China's export is going strong, I would say China's fundamentals is very good. Given this, I believe China's, domestically speaking, the interest rate in the long term will maintain a fluctuation, a trend of fluctuation.

In terms of going downward, I don't believe the interest rate in China will go down very quickly. Of course, on the other side, will the interest rate go up?

There's also a lot of factors, for example, how to further boost China's real economy, and also you see the real estate debt needs to be paid back, and the local government need to pay back their debt. I believe the interest rate is having a hard time to go up.

On the whole, I would say given this kind of fluctuation of the long-term interest rate in China, so, I would say there will be a very different opportunities for those kind of institutional funding. For insurance money, we are going to try to seek opportunities for long-term asset allocation.

If we look at the stock market on the macro trend, I believe China's stock market is going to have a long-term, slow bull market. I believe in China, the stock market will have this kind of structural opportunities.

If we look at the earnings, the overall earning capability is on the rise, and with structural opportunities, for example, we do see some sectors, for example, AI, and the new consumption, and innovative medicine, etc. These structural opportunities still exist.

If we look at the liquidity, China will maintain a lot of liquidity this year. Household saving, household deposit, people will think about their savings, where to put their money.

We believe this gives a lot of liquidity to the market. If we look at the supply and demand, a lot of demand for A-shares.

There will be a lot of money looking at the A-share market. If we look at the valuation of the A-share market, I believe the total valuation, overall valuation is quite low.

If you look at the CSI 300 index, etc., it's a lot of still attraction and opportunity. The average valuation is still at the historical average range.

On the whole, I would say CPIC will continue to maintain its main business of insurance, will continue to look at a healthy ALM, asset-liability matching, will try to base our SAA on the long-term trend of the macro environment. We will maintain healthy SAA, and healthy asset-liability duration gap, and also try to properly manage our investment, including the net investment yield, and try to diversify the source of net investment income.

Also, we are going to enhance alternative investment, for example, unlisted equity, and also PE, and REITs, etc., and also explore opportunities for overseas investment so as to better enhance the long-term efficiency of our management of insurance money.

I actually am a analyst from UBS, and congratulations to the management for your profit numbers and net assets. Now, I have two questions.

Number one, on the NBV. Now, for agency channel and bank channel, how did they do in terms of NBV?

Now, if we look at the new business premium, agency and bank did differently. For example, as you mentioned, you mentioned that you strictly follow the rules regarding the integrity of reported expense rates.

Now, given this, do you worry that the bank's NBV is weaker? What's your expectation for the whole year?

The second question is about the net profit. Now, your net profit, well, maybe partly is because of the income tax issue.

Now, what is the income tax rate, the difference between this year and the previous year, is it a one-off effect, one-off event? Lastly, I would call on the company, maybe could you disclose your comprehensive investment yield?

Maybe this number, this indicator is a better one. You can better compare it with your comprehensive investment yield with that of your peers.

I call on you to disclose this comprehensive investment yield in the future. Thank you.

The interpreter currently cannot hear anything from the from the Chinese channel. Now, I believe we are back, back online.

Thank you.

Thank you for your attention. Now, in Q1, for in terms of NBV, it was improved by 0.9%.

Now, for agency, improved by double digits. For the bank channel, well, it was the growth was not that high.

Now, for for that, because the bank channel, first of all, you see, if we look at the new business of the bank channel, now, actually, that was a pretty big drop in terms of new business. If we look at the structure, regular premium new business improved by 30 37%.

Now, single-pay business, new business, dropped a lot. Last year, single SP business accounted for 60%.

That was a very high percentage in last year, but we now adjusted the structure between RP and SP. We actually well, we voluntarily reduced the share of SP, single-pay products.

If we look at the margin, last Q1 last year, the bank channel well, mainly sold traditional products, but this year, par life products accounted for above 90% of all the products sold. We believe those two traditional products and par life products have different margins, so that's the the change in terms of product mix.

Secondly, we believe we compared to peers, we lag a little bit lag a little bit behind, but I need to point out that we are fully compliant. We strictly follow the rules on the integrity of reported rates, expense rates, especially for the bank channel.

If we look if we look at the expense spread, actually, our expenses improved a lot this year, I believe this is also a negative impact on our business growth at the bank channel. Now, going forward, I would say for the bank business, the NBV, I I believe there will be a positive growth in terms of NBV.

I'm quite confident. Number one, because first of all, in terms of the regulator, now,

the Chinese line, Chinese channel is down again. The interpreter cannot hear anything on the Chinese channel.

Now, we're back online. Now,

for the CPIC as a whole, now,

I believe the microphone is down again on the Chinese channel.

Sorry, maybe the speaker made some kind of mistake. Anyway, we are back online.

Now, for CPIC, we are going to follow regulatory requirements going forward as we as the pace of business pick up. I believe actually during the last results results announcement, I mentioned that we pay a lot of attention to the discipline or of the even distribution of our business.

If we look at Q4, our Q4, the share of the share of business growth in Q4 is much better than our peers. That is to say, we pay a lot of attention to the even growth, even business growth by quarter.

If we look at our quarterly numbers, maybe our Q2, Q3 numbers may be better than Q1. I believe CPIC is different in this, compared to others.

I believe when with the passing of time, as we grow quarter by quarter, and as we continue to improve our product mix, we believe our NBV for the bank channel will pick up, will improve. That's to answer your first questions.

Thank you. Now,

maybe the second question, Ms. Xu?

Okay.

In Q1, net profit improved by 4.3%, that thanks to life and P&C business pretty good insurance performance. In terms of investment, as we also mentioned, investment, although there's a lot of market fluctuation, our investment yield, well, the market actually went down year on year, but we surpassed our A-share market benchmark.

Secondly, we have convertible bonds. There is a positive contribution of about 500 million yuan from the convertible bond treatment.

On the other hand, as you mentioned, in terms of income tax, we always are prudent in this regard, the treating of income tax. You see, we have deferred income tax assets.

The total size, absolute size is quite small. Now, when we judge whether income tax can be deferred or not, we will look at the nature of the tax.

Can we make it up in the future? Maybe if we cannot make it up in the future, then I will not treat it as a deferred income tax.

On the other hand, at different time period, when we try to determine the income tax, we need also look at the current period deductible income. Now, why, if we look at income tax on the whole, and the deductible income is negative, that's mainly because of the life business, CPIC Life.

Why? Two reasons.

Number one, deductible income, in recent years, we increased our allocation in T-bonds, we had a lot more deductible incomes because of this. When will it be booked?

The timing that the booking is quite evenly distributed. Secondly, our profit is affected by the capital market, and also the new accounting standards.

Under the new accounting standards, the impact on our profits will be more felt, more impacted by capital market movements. In terms of determining the income tax, on one hand, we had quite a big increase in the tax-deductible income, and secondly, the impact from the capital market fluctuation is quite big.

For Q1, well, the deductible income is actually bigger than our pre-tax profit. You'll see we actually have a income tax assets, you will see a negative number for the income tax in Q1.

This accounting treatment is consistent with our previous treatment. Of course, as I mentioned, this is a transitory issue.

Last year, in Q1 last year, our deductible income was smaller than pre-tax profit. Last year, the number was positive, and this year, Q1 this year, the income tax number is negative.

If we look at whole year, however, because the release of the deductible income is evenly distributed, but our profit pre-tax profit number will go up in Q2, Q3, Q4. Going forward, you will see the income tax number will not be negative.

In terms of disclosing our comprehensive investment yield, let me just explain. In our interim report and also our annual reports, we will disclose the comprehensive investment yield, and we will also exclude certain impact based on ALM disciplines.

Regarding your call on our disclosure of comprehensive investment yield, we will discuss internally. We will try to disclose a lot of indicators so that investors can have a better picture of our long-term investment yields.

In Q1, as Ms. Xu mentioned, we had a very good SAA and investment yield.

Our investment has met our expectations, especially closed equity investment did much better than the market benchmark.

Thank you. I'm Liu Xingqi from Guotai Haitong Securities.

Congratulations to your steady performance. I have two questions.

Number one, as Mr. Su mentioned, your Q1 investment yield is quite prudent, quite steady.

That's very good. Now, your equity share, your equity allocation is lower than the peers.

Now, also, you mentioned you are quite positive about equity market. Now, going forward, are you going to improve your share of equity asset allocation?

Second question, OCI and TPL, the share between OCI and TPL, are you going to make some adjustment between OCI and TPL? This is a common ask question.

Are you going to make any changes? That's on the asset side.

Second, on the liability side, now, you mentioned in Q1 CPIC paid a lot of attention to value growth in terms of the duration, especially for the bank channel. Now, in terms of the structure, now, you're going to improve the product mix, and the margin will improve, and new business growth will face some kind of pressure.

How are you going to balance value and premium growth?

Thank you. Let me answer your first question.

Now, I believe most of us would like to know how the capital market volatility will impact on the insurance company. As the market changes, I believe CPIC, we are consistent.

We always stick to our investment principles. That is, we need to be prudent, and we need to look for the long term so that we can have the capability to cross the cycles so as to maintain a healthy asset-liability matching.

As we mentioned, we need to have a refined dumbbell investment style, so that our investment can be sophisticated, and we can effectively manage risk and properly manage our investment. It's a basic logic.

Secondly, in terms of asset allocation, we will maintain prudent SAA, and improve our investment research capabilities. We will look at the big asset categories so that we can have a flexible TAA.

We will be flexible and disciplined so that we can better seize the structural opportunities on the market. We will improve our TAA structure and strategies so that we can better respond to the temporary or short-term structural opportunities.

Now, that's for equity market. Now, I believe we need to look at our asset-liability profile.

Each company should have its SAA and TAA, which are to be based on asset-liability profile. We should not simply compare the share of equity asset allocation, for example, across different insurance companies, because we need to look at our asset-liability profiles.

On the long term, I would say our SAA and TAA, I believe they are at proper levels. Now, regarding the new accounting standards, now, I would say the new accounting standards would like to reflect the actual picture of insurance companies in a more effective way.

Regardless of the standards, I believe the long-term return will not be affected. Long-term returns will be there, whatever accounting standards you use.

Now, of course, CPIC, for example, the high-dividend equity allocation will be booked under OCI. For OCI, we will continue to improve the accounting categorization.

Of course, for insurance companies, asset allocation, we need to look at a lot of different asset class. We need to diversify our risks.

We need to improve the stability of our investment portfolio. We need to look at new opportunities, new areas, so as to improve our returns.

We should seize upon the opportunities generated by market fluctuation so that we can, ultimately, have a long-term results from SAA.

Thank you, Mr. Liu, for answering the question.

Now, you also have a question about the bank channel's margin. Now,

for the bank channel, we we restarted our bank channel. At the beginning of the restarting, now, there were some restrictions, for example, from the bank partners, and we have a quite big concentration of geography.

For example, previously, we started in 10 cities; now, we expanded to more than 70 cities. Now, for the bank channel, most of our customers are in those cities.

They have their specific needs. Now, actually, we started from 2020 in the past last 5 years.

Last year, for example, for for each of the last 5 years, our SP business exceeded 20 billion. Last year, it was more than 20 billion.

The ratio between SP and RP can be as high as 10 to 1, and the last year it was 5 to 1. The ratio is going down, the ratio between SP to RP.

Now, how to improve the margin of the bank channel? Now, we do it in a quite simple way.

We need to actually control the amount of SP business. This kind of when we reduce the sales of single-pay business, and for the RP business, actually, it grew by 37% year on year in Q1.

Now, the RP to SP ratio is about 1 to 1.2. If we look at the margin, we need to separate, break it down by RP and SP.

Now, previously, they're just two this kind of pure, pure SP, that is you just pay premium for 1 year and get protection for 5 year. We should look at another indicator.

We should, for example, we just pay this kind of a hybrid of RP and SP. Now, for example, the payment is just for several years, but the protection is for the whole life.

This kind of products, hybrid products, also have quite high margin, what we call this kind of single-type regular premium. This is a hybrid, in between.

We also should look at RP. Now, if we look at the peers, our RP business compared with our peers, in terms of the percentage, the share, and in terms of margin, they were both high.

The margin could be 20% already. Also, in terms of the premium paying period, we can make it 5-pay or even 10-pay.

In Q2, starting from Q2, we will focus on products more than 5-pay so as to further expand margin. In terms of the format of the products, we will also make some adjustment, for example, the share between par life and the traditional life.

Thirdly, we need to explore opportunities to actually offer some protection products in the bank channel. Thank you.

That's my answer to this question. Now,

Thank you. I'm Mao Tingting from CICC.

I have two questions. Number one, about life agency channel.

Q1, you did better than expected. Now, did you see this kind of a long-term recovering trend in terms of the size of the sales force?

Now, for bank channel, there's a lot of competition between big insurance. Now, how do you think about the importance of agency channel?

What are your main strategies going forward? Second question is about the finance.

Now, you don't disclose the insurance performance. You didn't break it down by life and P&C.

Now, the insurance servicing performance improved by 20%, that's by our own calculation. Is it true?

How do you break it down by life and P&C? Going forward, maybe you can do some more disclosure under the new accounting standard.

Thank you for your attention to our life business. That's a very good question.

You should not only care about bank channel, but also agency channel. That's very good.

Now, for CPIC, agency is always very important to CPIC. I would believe our agency channel is our like a cornerstone to CPIC.

The transformation of agency hinges on the transformation of the team, the sales force. In Q1, if we look at the agency of course, there's a slight positive growth in terms of total sales force, total headcount.

Actually, by April, we have more than 190,000 agents. The trend is positive.

Now, of course, we did a lot of work to make this happen. Number one, we focused on recruitment to stabilize the team in terms of selecting and the training of the agents.

We did a lot to stabilize the size so that we have a stabilized number. Secondly, we pay a lot of attention to the structure of the sales force, of the agency sales force.

Now, actually, starting from Q2 last year, we started to focus on the customer, the products, the agents. We have a differentiated approach to the customers, especially this year we paid the most attention to the agency structure.

For example, we now look at high-performing and the average teams. We look at agents who are with us for longer and shorter period.

For example, we look if the agent is a agent leader or if just a high-performing agent. We divide them into different segments.

For example, our core teams improved by 20% in terms of performance, and the share of our core teams improved by 1 percentage point. Secondly, we try to improve the productivity of those teams.

We focus on the productivity and production. For example, first-year premium improved by 40% of our core teams, of core agents, and the first-year first-year commission improved by 20% for our core agents.

You see these numbers are improving. Aside from that, we also look at one other indicator, that is we focus on the compliance.

We focus on the integrity of reported rates, expenses. Starting from April 1st last year, Q2 performance shows significant difference, because actually we had a new basic law for agency channel from last April.

We improved our commission structure, improved, enhanced the management of our agent behavior. The cost improved, expense were better managed.

We had a more bigger for this channel. We believe, given this, as long as we do the right thing, as long as we do it in our daily management, our agency channel will continue to have healthy growth, and agency channel will maintain its role as a cornerstone of the company.

Now, we did not actually disclose information separately on the insurance servicing performance. Now, but we can look at some related numbers.

For P&C side, our combined ratio improved by 1 percentage point. If we look at the life side, we also saw improvement in underwriting profitability.

Our net profit improved by 9%. That is to say, we have improvement both for life and P&C in terms of insurance servicing performance.

Actually, starting from last year, we have been improving our business mix, and we are also doing a lot of work to reduce risks. For life business, there's several aspects.

For example, as we mentioned, the regulatory requirement regarding the integrity of reported rates, expense, we did a lot to manage expenses. We saw improvement in terms of expense spread margin.

Secondly, with the implementation of the new accounting standards, we pay more attention to the margin of our insurance contracts. In Q1 this year, I believe this supported our healthy insurance service performance.

You'll see quite good results in terms of the insurance service performance in Q1 this year. Going forward, we will look at the ways to disclose information in this regard.

Now, because of the time, I believe we only have time for one last question.

Thank you for the opportunity. I have two questions.

Number one, on the insurance service performance issue. Now, if we look at the four quarters of last year, I believe there's quite of a fluctuation between quarters.

Why the differences between each quarter? Now, what about P&C side?

For P&C side, underwriting profit is good, but the premium growth is slow. Now, why is that?

What's your expectation for the P&C growth for the whole year? Thank you for your attention.

Now,

maybe we'll answer the P&C question first. Thank you.

Now, in Q1, P&C business grew flat, very slow. If we look at it more closely, auto business, we grow faster than peers because of our good performance in terms of new energy vehicles.

For non-auto business, we lagged behind our peers in terms of growth. That's because, as we mentioned, we are trying to improve our business structure, starting from last year.

Now, for example, we are adjusting our agricultural insurance. That is why in Q1 our non-auto business grew quite slow, and that is also why the P&C as a whole had a negative growth in Q1.

We are quite confident for the forthcoming quarters. For Q2, Q3, we believe the growth of PC business will return to normal.

We're quite confident about that.

Now, I'll answer the next question. Now, you see, on the whole, our insurance service performance is quite evenly distributed.

Secondly, of course, when I say evenly distributed, there might be slight differences between quarters. Now, as I mentioned, CSM amortization is a main source.

This is quite even. The second, there will be operational variance and P&C profitability.

They are to be affected on a seasonal basis, quarterly there won't be some time difference. For example, it might be impacted by our business strategy.

For P&C, you'll see the combined ratio might be impacted by catastrophes. There might be some kind of seasonality involved.

Slight fluctuation is there, mainly because of the factors I mentioned above.

Thank you. If you have more question, you can contact our IR team.

Now, that's the end of the session. Thank you.