Thank you for standing by for Fanhua's third quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. All lines have been placed on mute to prevent background noise. After management's prepared remarks, there will be question and answer session. Please follow the instructions given at that time if you would like to ask a question. For your information, this conference call is now being broadcasted live over the internet. Webcast replay will be available within three hours after the conference is finished. Please visit Fanhua's IR website at ir.fanhua.com under Events and Webcast section. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the meeting over to your host for today's conference, Miss Oasis Qiu, Fanhua's Investor Relations Manager. Thank you. Good morning and good evening, everyone. Welcome to Fanhua's third quarter 2023 earnings call. A replay will also be available on our website after today's call. During this call, we'll be discussing some non-GAAP financial measures, and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release. Finally, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are made based on management's current expectations and beliefs concerning future events may impact the company and therefore may be impacted by a number of business risks and uncertainties that could cause our actual results to differ materially from those projected or indicated. Such risks and uncertainties include, but not limited to, those outlined in our filings with the SEC, including our registration statement on Form 20-F. We do not undertake any obligation to update this forward-looking information, except as required under applicable law. Joining us today are our Co-Chairman and Chief Executive Officer, Mr. Yinan Hu, Co-Chairman and Chief Strategy Officer, Mr. Ben Lin. Mr. Hu will start the call by sharing his view on recent market trends and our strategy proposition, followed by Mr. Ben Lin, who will provide a review of financial and operational highlights and discuss our business outlook going forward. There will be a Q&A session after the prepared remarks, and please know that you can find our presentation material relevant to this call from our official website. With that, I will turn the call over to our Co-Chairman and CEO, Mr. Hu, and Ben Lin, our Co-Chairman, will translate for Mr. Hu. Mr. Hu, you may begin. [Foreign language] Good morning and good evening. Thank you for joining us on our Q3 earnings call. [Foreign language] In the wake of the pricing rate change for life insurance products, the life insurance sector has experienced evident fluctuations in premium growth, with a period of very strong growth from second quarter to July, followed by a significant slowdown from August to October. Notwithstanding this challenging environment, execution of our key strategies continue to pay off. [Foreign language] Over the past two quarters, both the insurance industry and the intermediary market that we operate in, including our operations, have inevitably faced significant impacts from regulatory policy changes. I would like to take this opportunity to discuss our perspective on these changes. Starting from first of August, the life insurance industry has officially entered the era of a 3% pricing rate cap for traditional life insurance products. In the short term, the restoration of customer demand may take some time. However, in the longer term, considering the backdrop of declining bank deposit rates, we believe that traditional insurance products with a 3% guarantee interest rate remains an attractive defensive asset class. [Foreign language] …此外，我们也注意到，最近银保渠道开始严格执行报行合一。我们预计，监管部门也将未来的几个月启动专业中介渠道的报行合一。无论是预定利率下调，还是报行合一的落地，在短期内无疑会对整个保险行业带来巨大的挑战。但我们认为，从长远来看，这两项政策的落地也将推动行业实现更加规范、可持续的高质量的发展。 In addition, we also expect that the regulator will extend the recent commission rate changes in the bancassurance channel to the agency and independent broker channels in the coming months. While the short term impact of both the pricing rate adjustment and the enforcement of commission rate caps could present significant challenges to the entire insurance industry, we maintain the perspective that in the long term, these policy implementations will see the industry towards a more higher quality and sustainable growth trajectory. [Foreign language] 我们预测，未来行业的发展将由产品和费用驱动，逐渐地过渡到以科技和服务为主导。这意味着那些投资能力强，创新服务和科技能力，资本金充裕的公司将处于更加有利的位置。强者愈强，市场会趋于更加的集中。这一趋势不仅在保险公司层面体现，中间市场同样如此，中间市场未来可能出现多元寡头并进的局面。 We anticipate that the future development of the industry will shift gradually from being driven by product and sales commission to be predominantly driven by technology and services. This implies that companies with innovative services, technological capabilities, and ample capital will enjoy a more favorable position. The strong players are likely to become even more dominant, leading to a trend of consolidation and increased market concentration. This trend is not only evident at the level of insurance companies, but is also applicable to the intermediary market. We think the scenario of a few major intermediaries dominating this market is a possible outcome following these regulatory changes. [Foreign language] 我们认为未来的中介市场的发展方向将是公司走向平台化，而当前的市场挑战将会推动越来越多的中小公司退出市场，或者选择加入大平台来维持经营，由平台为他们提供中后台的支持，从而降低系统的投入、合规、运营培训等刚性成本，集中精力于前端的客户开拓和关系维护，同时提升差异化的这个服务能力，实现业务的可持续发展。 We envision that the future trajectory of the intermediary market will see larger companies transitioning towards platform based operations. We expect to see a large number of small to medium sized brokers to either exit the market or choose to work with larger broker platforms in order to survive. These collaborations could involve platforms providing essential mid-end and back-end support, enabling these companies to lower their OpEx costs relating to IT, compliance, operation, and training. This allows them to focus more on customer acquisition and relationship management at the forefront, and enable them to enhance differentiated service capabilities to achieve sustainable business development. [Foreign language] 对于泛华而言，这一新的趋势和公司的开放平台战略高度契合。事实上，我们原本预计需要数年才会出现的趋势，有可能在2024年初就会出现，这将加速泛华从销售公司向平台化公司的转型，从而推动规模化和市场份额的提升。在此过程中，我们也将加强与我们的主要供应商，中小保险公司的深度良性合作，通过我们的科技能力和客户服务，使得我们不仅仅只是承担保险公司销售渠道的角色，还可以在IT和服务领域深度合作，从而获得更多元的收入来源。同时，通过规模化的发展，在产品研发、新产品推动上获得更大的议价空间。 For Fanhua, this emerging trend aligns well with our open platform strategy. In fact, this is a catalyst that we previously thought could take years to materialize, but it is now looking more likely to take place in early 2024. In essence, these changes should help expedite our transformation from a sales-focused company to a platform-centric entity. This, in turn, should give us the opportunity to gain more market share and grow our scale advantage. We are also looking to intensify our collaborative efforts with our key product suppliers, the small- and medium-sized insurance companies, to foster stronger and mutually beneficial partnerships. Leveraging our stronger capability in sales, technology, and customer service, we aim to extend our relationship with our product suppliers beyond sales and distribution, but also in IT and services. In turn, we aim to generate a more diversified revenue stream from our insurance partners. With greater scale and market dominance, we aim to work closer with our partners in product development and develop greater pricing power. [Foreign language] 我们对行业未来的发展充满信心，坚信公司的战略在新的市场环境中将迎来更多的机遇。... We remain confident in the future prospects of the industry and firmly believe that our company's strategy positions us well to capitalize on numerous opportunities in the evolving market landscape. We're dedicated to advancing the implementation of our established strategies, with a commitment to delivering long-term value for our shareholders. [Foreign language] Next, please, let us welcome our Chairman and Chief Strategy Officer, Ben Lin, to provide an overview of our financial performance and our key strategies going forward. I will go over this in English just to save us time, and we'll allocate more time for the Q&A later. So I'm pleased to present our latest earnings results for the third quarter of 2023. The pricing changes to life insurance products effective from August caused a spike in new business sales in July, which was then followed by a slowdown in sales in August and September as our insurance partners took time to adjust their new product offerings. Despite this disruption, our results over the quarter were solid, and we remain confident that our strategies are working well, allowing us to persevere even under a volatile industry environment. The key highlights of our third quarter results include: total life insurance premium grew by 23% year-on-year to RMB 3.4 billion. First-year premium grew by 10.3% to RMB 584 million. Net income attributable to shareholders came to RMB 117.7 million, representing a significant year-on-year increase of 382%. This uplift is largely due to an unrealized gain from our investment in Cheche Technology Limited, in which we hold a 2.8% stake, and they recently went public. Fanhua disposed our P&C division back in 2017 to Cheche for a combined consideration of cash and convertible loan. We obtained the equity stake in Cheche upon exercise of option to convert part of the convertible loan. Our strategic focus on professionalism, specialization, digitalization, and open platform remains the cornerstone of our success. Our operational highlights include, number one, our commitment to digitalization has led to substantial cost reduction and efficiency improvement. Our digital technology platform underwent further intelligent transformation, leveraging artificial intelligence and smart algorithm. Like many of our peers, we are trialing with a lot of AI tools in our business. We introduced AI-enabled digital avatar, AI assistants, and smart recommendation system, customer distribution system to assist insurance professionals in offering efficient and personalized solutions to our clients. For the third quarter of 2023, our adjusted operating expense ratio decreased from 32% to 30%, a significant improvement compared to the same period last year, despite increased IT investments. Number two, we remain committed to empowering our sales team with the expertise needed to ensure high-quality growth. We persist in conducting our 3F training. As of September 30, the number of individuals trained in 3F, which stands for Fanhua policy custodian, Fanhua retirement planning, and family office consultancy, reached over 22,000. The positive impact on agents is increasingly evident, with improvements observed in the quantity of our top-performing agents, but also led to significant increase in productivity. For the third quarter of 2023, the monthly average per capita productivity of our 100 K premium agents increased by 23% year-on-year to CNY 270,000, and that of our MDRT increased by 27% year-over-year to CNY 600,000. The number of MDRT agents also increased by 29%. The proportion of high-performing agents contributing premiums also rose from 46% to 62% compared to the same period last year. In response to the growing demand for diversified and personalized services among high-net-worth individuals, we launched the Family Office Advisor Incubation Program, built upon our 3F Training and certification system, with the specific aim of attracting talent from other professional industries outside of the traditional financial industry. This initiative has garnered significant attention within the industry, and we have already initiated preparations in Guangdong and Sichuan for the program. Number three, our Open Platform Strategy continues to deliver material results. We have successfully linked with 791 third-party agency companies as of September 30. These collaborations, combined with our M&A, have contributed over 28.3% to our sales volume, highlighting the success of our Open Platform Strategy. We have also officially launched the Digital Tenant System in late October, which has received positive response from the industry. To date, we have received many inquiries from third-party insurance brokers and insurance companies on onboarding the Digital Tenant System, and so far have signed up two insurance brokerage firms as our digital tenants. We believe that the current market challenges and the focus on digitalization and cost efficiency will bring more business opportunities for our Open Platform Strategy. The fourth point I want to go through is we have made significant progress with overseas expansion, adding a new pillar to our growth strategy. On October 23, we announced a strategic partnership with Asia Insurance to establish two joint venture companies. In both cases, Fanhua will own 60% controlling interest. The two companies focusing on developing life insurance distribution technology for the Asia Pacific region, mark an important milestone for Fanhua in our endeavor to establish our global presence and realize our vision of becoming a globally leading, technology-driven financial services platform. By joining forces with Asia Insurance, we are confident that we'll be able to leverage the strength of both parties to capitalize on the significant growth opportunities in the Asia Pacific region and create long-term value to our shareholders. Finally, as I mentioned earlier, we recognize an unrealized gain from the investment of Cheche during the third quarter of 2023. We would like to remind our shareholders that this is a one-off gain in nature, and our holdings in Cheche could continue to cause volatility to our net profit over the short term. The most important implication of Cheche's listing, in our view, is that we hope it can clear legacy misunderstandings regarding our relationship with Cheche. Our divestment of our P&C business to Cheche and our focus on our core life insurance business have proven to be the right strategic move. We are also delighted for Cheche to be able to complete their listing on the Nasdaq. Looking ahead to the fourth quarter, the anticipated implementation of commission cap is expected to bring about short-term challenges for the entire industry. However, as Mr. Hu highlighted earlier, we also see this as an important catalyst to accelerate the development of our open platform strategy and fast-track our transition from a sales-oriented company to a platform-oriented. In the Hong Kong market, we will continue our collaboration with Asia Insurance, seeking business opportunities and assembling teams for our joint venture companies. We're also excited to share that we have started exploring growth opportunities outside of Asia and are actively looking for partnerships similar to that we have formed with Asia Insurance. In closing, I would like to say that the life insurance industry in China remains very young, and the intermediary segment is still at its infancy in terms of development. We strongly believe that the market opportunities ahead of us remain very significant. At the same time, we're also conscious that our young industry will no doubt continue to face regulatory changes as our regulator continue to direct the industry towards higher quality growth. Fanhua has been established for 25 years, and we have a strong track record of navigating through changes. This gives us confidence that we can continue to deliver our shareholders under all market environments. This concludes our presentation. I'll turn the floor over for Q&A. Thank you. Hello, Amber. We are ready for questions. Thank you. We will now begin the question and answer session. To ask a question, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Once again, that's star one one for questions. Our first question comes from the line of Yuyu Zhang from CICC. Please ask your question, Yuyu. [Foreign language] Hey, 感谢管理层给我这个提问的机会。首先，非常恭喜管理层给我一个非常稳定的这个业绩。那我这边可能有三个问题想请教一下，那第一个呢，可能是还是关于这个监管的，那未来可能确实实行了这个经纪渠道报行合一，那还是想请教一下，这个对公司的这个经营可能，会具体产生哪些影响？那第二个问题的话，还是关于这个与亚洲保险公司的战略合作，那是否有更进一步的规划或者时间，现在能跟我们，再分享一下吗？那第三个问题呢，还是关于这个，开放平台的。那我们开放平台就是想了解一下，目前通过这个自签协议签约的这个用户大概，能有多少？然后呢，在自签协议用户的这个扩展上，未来会有，怎样的计划？那我这边简单翻译一下我的问题啊。So my first question is related to the regulation. The regulator mentioned that they may soon implement the fee regulation, as we call it, 报行合一, in our agency and brokerage channel. So, could you share us some more color on if it happens, then the impact on the whole industry and Fanhua? And my second question is related to all the overseas expansion. We noticed that Fanhua will establish two subsidiaries with Asia Insurance. So could you share some color on the strategy cooperation? And is there any further timeline you could share with us? And my last question is about our Open Platform Strategy. So how much digital tenants success or their own agreements do we have on our open platform? And do we have any further plan to attract more digital talents? Thanks very much. [Foreign language] 嗯，你来回答第一个问题。 [Foreign language] 好。好嘞，我是胡 南，我来回答第一个问题，就是关于报行合一对公司的影响。首先这个报行合一，我们认为这个政策是非常合理的。那这个对于整个行业，因为我们也知道现在行业经营比较困难，困难的原因一方面是这个资本市场投资领域，那么再一个方面呢，就是这个... [Foreign language] 销售费用高企，所以我们认为在监管一方面降低这个预定利率同时，然后通过报行合一降低这个销售的费用，这个对于，整个行业的长远的发展，健康的发展，我们认为是 非常正确的，也是非常支持这样的政策。 OK, so on your question about the commission rate impact. So first of all, we want to state that, the policies that you've been, you know, you've been hearing coming out of the regulator is very understandable. Obviously, the industry right now, the life insurance industry in China right now is very challenging. We can see a lot of insurance companies are facing, difficulties in terms of investment return, given the weak capital market environment. Sales expenses are also very high. So, you know, overall, the profitability situation for life insurers in China has been negatively impacted by these issues. The regulated efforts over the last few months have been focusing on, number one, reducing the liability costs by capping the guaranteed return. And number two, is they're trying to reduce the sales expenses. So overall, we think these measures are intended to improve the financial conditions of the life insurance industry, which should be positive over the long term. [Foreign language] 保险公司要有盈利，能赚到钱，然后产业链上的其他的这个服务机构，包括这个中介，才有生存的这样的空间。所以我们，这是基本的判断，支持的态度。那么第二，那么在这个保险合一之下，那么对我们专业中介来讲，那么核心就是比拼这个最低的保单获取成本。那如何才能够有一个更低的保单获取成本呢？那我们看到，那么要么就是规模化，要么，就是极致的这个管理运营成本的这个，降低。 So, for our business, you know, we need insurers to stay profitable. That's, that's, that's an essential ingredient for our survival as well. So we basically embrace these changes that are coming through. The impact for our intermediary market will be that it puts pressure for everyone to lower their policy acquisition costs. We believe the operators with the lowest costs will benefit in this environment going forward, and this will force us to reduce costs on two fronts: number one, through scale, or number two, through efficiency improvements. [Foreign language] 所以，我们觉得接下来的市场的这个价值，或者这个市场的竞争是两个方面。第一个方面是科技，只有通过科技才能最大程度地降低成本，也只有通过科技才能支持规模化。第二个方面呢，是专业服务。专业服务，特别是支持高净值、高净值的从业人员，他们的专业成长。所以，我们认为谁在这个未来的过程中掌握这两个能力，就在这个市场上，那么就能够体现出他的价值。 We think, there will be two very important criterias for any intermediary to be successful in the upcoming environment. Number one, the ability to develop market leading technology, which should help reduce costs and also increase economies of scale. Number two, through professional service. By that, we mean for the high quality agents, intermediaries that are able to provide a professional development career path, will have a competitive advantage in the new environment. [Foreign language] 所以，在这个市场上，如果要能够提供这两能力的话，所以，那是，只有大的公司，才能够，才能够提供。所以我们认为保险合一之后，会带来市场从目前的分散，会迅速地走向集中，以及会形成这个少数的这个寡头。 We have the view that right now, the market that we operate in is very fragmented, with 2,800 competitors, of which we think only a few companies have the capability to develop these two very important operational abilities that we mentioned about in terms of technology and professional service. So, and this is why we expect that if these regulations were to be introduced going forward, we are likely to see the intermediary market in China becoming more concentrated and potentially be dominated by a few large companies. [Foreign language] 泛华，一直是在推动从销售公司到平台公司的转型。报行合一的政策实施，会加速泛华的平台化的这样的一个进程。所以我们认为，一旦报行合一实施，那么也是这个泛华竞争力的一个体现，特别是我们现在已经在...... [Foreign language] 完全的数字化和开放平台的建设，对于大量的市场从业者可以提供这个中后台的支持，这样的话来帮助大家降低成本，然后给这个参与市场的参与者提供更多的专业服务。从财务表现上讲，我们认为报行合一会对泛华短期来讲，在盈利上可能会承压，盈利上会承压。但是，我们会借报行合一的这样的一个政策的实施，加速推进这个开放平台的战略，将围绕着这个提升市场占有率，作为我们的这个整个的经营的经营的目标，将规模化，将这个规模化和基础行业的这个数字化服务，那个来帮助这个整个行业的健康发展。 So for Fanhua, you know, over the last few years, our strategy has been focusing on transitioning from a pure sales company to a platform-centric company. And as I mentioned earlier, these regulatory changes we think is going to accelerate our platform evolution. We have very evident competitive advantages in terms of technology, and our strategy is really leading the market in many sense. We are the first to launch this platform strategy that we think should help lower the IT costs for a lot of the small to medium-sized intermediaries in the market. So overall, the way we think about it is that these regulatory changes fits quite well with what we're trying to do with our company and what we're trying to provide for the industry. In terms of financial impact, however, there will be some short-term pressure, that's for sure, given the commission rates are likely to drop. However, by focusing on accelerating our platform strategy, we aim to increase our market share significantly and gain significant economies of scale. [Foreign language] 好的，第二个问题是关于与亚洲保险的这个战略合作。那么这个问题请这个Ben你来回答。超过。 I'll try and answer this in English, this time again. So we have basically formed two joint ventures with Asia Insurance in Hong Kong, both of which Fanhua owns 60%, Asia Insurance owns 40%. As many of you may know, Asia Insurance is the insurance subsidiary of Asia Financial Holdings in Hong Kong. The aim of these two joint ventures, in essence, is to launch Fanhua's expansion overseas. And what we intend to do with Asia Insurance is mainly focusing on exporting our technological capabilities in China onto the global stage. As many of you may know, sales technology adoption in China now is very mature compared to a lot of markets outside of China. 100% of our sales in China right now is basically paperless. It's all driven by our app. In fact, what's different about China and versus Hong Kong is that all of our agents can use Fanhua's app, Lan Zhanggui, to basically issue policy proposal and also complete the entire transaction process. In Hong Kong, where you have 811 brokers, they cannot complete the entire transaction. In Hong Kong, if a broker was to sign an insurance policy for a client, they have to issue the policy on the insurer's platform. So we think there's immense opportunity for Fanhua to export all the IT that we have developed in China over the last 10 years, which cost us CNY billions in terms of IT spending into Hong Kong. Some of our competitors in Hong Kong are already charging HKD 200,000 per year for very simple apps that basically just does policy illustration, policy comparison. So you can imagine the revenue opportunity that we can gain from expanding into just Hong Kong. And beyond Hong Kong, we are also exploring with Asia Insurance about expanding into Southeast Asia, where they also have a very strong presence in the P&C business. So that's, that's the essence of what we're really trying to do with Asia Insurance. What you can expect is that over the coming months, there'll be a few things. Number one, we are at the final stages of completing acquiring a local life insurance brokerage license, which should basically enable us to have contracts with up to 17 life insurance companies in Hong Kong, and we'll further increase that. Post-acquisition, we'll sign up with more insurance companies in Hong Kong. Secondly, we are already at the very early stages of translating our Lan Zhanggui app in China into traditional Chinese and also English that will be applicable to the Hong Kong market. We are also working very hard on the human resource front, basically recruiting the relevant personnel to launch our business in Hong Kong. So all in all, I think 2024, I have confidence that Hong Kong will potentially be a revenue contributor to Fanhua. Thank you. [Foreign language] 第三个问题是-... [Foreign language] 关于这个自签开放平台，自签协议的这个用户，这个目前的这个，我们的这个自，有3种协议平台上，一种呢是泛华的平台协议，一个呢是MGA的这个管理型总代理的协议，那么第三种呢是自签协议。自签协，这个自签协议呢，因为，受到保险公司的这个方面的这个，三方协议的这个，约束，也就是说保险公司跟平台的这个数据，交互的这样的一个，意愿的影响。我们自签协议的这个还是在一个，对接的过程中，在是在，在，在逐渐的这个推进。到目前为止呢，我们的自签协议的这个用户，不是太多，目前运营中的是3家，目前运营中的是3家。那么在，这3家也是在与保险公司的这个合作过程中，因为涉及到一些这个，自身的数 据安全，所以也在这个进展中。那么预计这个要有10家以上的自签协议的机构上线，那么这样的话，就是我们的这个平台才可能是一个，比较顺畅的一个体验。那么到那个时候我们可以，才可以这个全面的推广。那么，目前的这个，MGA的协议，已经在平台上运行得很好了，大概有791家，签约的渠道，然后在我们平台上都能够顺利地进行。那么这些这个已经签约的这些渠道，那么都会有自签协议，都会有自签协议，那么现在，是我们的潜在的这些客户。所以现在的这个过程呢，我们还在跟保险公司的这样的一个，这个，这个衔接过程中。 OK. So on our open platform, there are basically three types of agreements. number one is the Fanhua Agreement, number two is the MGA Agreement, and number three is the self-agreement. The question was relating to how many tenants that we have is using their self-agreement. What we want to explain is that for the self-agreements, it requires a three-way data exchange agreement between the insurer, the broker, and the platform. Right now, we have three tenants that's using their self-agreement in operation. Because it relates a lot to data security and data exchange, we think that we need about 10 in operation to fully promote this service. But the opportunity is very evident. You know, on the Fanhua, Yunfu Cloud and also MGA channels, we have a total of 791 connected parties in terms of on our IT system. They have their own agreement, and are basically our largest pool of potential clients. [Foreign language] 好的，谢谢。 Thank you. Once again, to ask a question, please press star one, one on your telephone. [Foreign language] 那么你的会议结束了，是吧？好，那先这样，嗯。 I am showing no further question. I'll now turn the conference back to Ms. Oasis Qiu for any additional comments. Thank you, Amber. If you have any further questions, please feel free to contact us. Thank you for participating in today's conference call. Thanks. Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.