AIFU Inc. Q1 FY2023 earnings call

• Strategic focus on quality growth led to increased agent quality and productivity, with 100k premium agents and MDRT members growing 27% and their productivity up by 18% and 37% respectively, contributing 42% of sales. - Open-platform and acquisitions contributed significantly, with Open Cloud Service Business division connecting over 300 external institutions and new business premiums up over 100%. - Digitalization delivered operational gains, with 13-month and 25-month persistency ratios improving to 93% and 87% respectively, and operating expense ratio reduced to 25.9% from 31.3%. - Future initiatives include expanding service offerings, training 3,000 Fanhua Family Office Consultants, implementing full license holder plan for agents, and accelerating market consolidation through open-platform and M&A.

Total premiums were up by 29% to RMB4.4 billion. New business premiums increased by 51.4% to RMB851.9 million. Total revenues grew by 20.6% year-on-year to RMB827.7 million, and operating income rose by 193.1% to RMB60.4 million. The Open Cloud Service Business division connected with over 300 external institutions and saw new business premiums grow by over 100% to over RMB80.6 million. The number of 100k premium agents and Million-Dollar Round Table members professional agents grew 27% year-on-year, and their productivity increased by 18% and 37% respectively, accounting for 42% of sales compared to 32% in the same period last year.

• Operational target to grow life insurance policy premium and operating profit by 50% and no less than 50% year-on-year. - Target to migrate 100 institutional customers to digital tenant system in 2023. - Confidence in achieving or exceeding second quarter targets and preparing for third quarter and second half.

• Business risks and uncertainties outlined in SEC filings, including regulatory changes, market competition, and integration challenges from acquisitions. - Risks related to potential impact of regulatory requirements on product pricing and sales momentum.

Q: Related to finished product demand, impact of regulator's request to lower estimated returns for new products, momentum of savings product sales, take rate trend, and M&A progress.

A: Lichong Liu addressed savings product demand, citing aging population, low interest rates, and softening economy as drivers. CFO addressed take rate, emphasizing focus on first year premiums, net revenues, and persistency ratio. Yinan Hu addressed M&A, stating no change to acquisition target, focusing on exporting digital technological advantages.

Q: Regarding agent productivity sustainability, share buyback plan progress, and regulation impact.

A: CEO addressed agent productivity, emphasizing transition to financial advisors for sustainable growth. CFO addressed share buyback, mentioning undervalued stock and progress in share buyback. CEO addressed regulation, seeing it as an opportunity to build compliance and risk management infrastructure through digital technology.