AIFU Inc. Q4 FY2023 earnings call

• Strategic focus on improving agent quality and productivity led to MDRT and 100k Premium agents contributing 65% of total first year premium, up 9 percentage points from 2022. Their productivity increased by 15% and 10% respectively.
• Digital technology empowerment resulted in an operating expense ratio decrease from 29.4% to 25.7%. Agents using the digital system had 1.6x higher productivity. Fanhua built an industry-leading digital empowerment system covering multiple areas.
• Open platform strategy had over 30% of total new business, with 854 channels signed by end of 2023, contributing over 1.1 billion in first year premium.
• Service-oriented ecosystem expanded to include trust service, family office, health care, etc. Held 256 family office consultant training sessions, certified over 1,200 advisors, and facilitated significant trust and premium amounts.
• Internationalization strategy advanced with Hong Kong subsidiaries launched and strategic framework agreement with Singapore White Group signed.

In fiscal 2023, Fanhua achieved total insurance premiums of RMB16.4 billion, a 28.7% year-on-year growth. First year premiums reached RMB3.8 billion, up 30.3% year-on-year. Operating income was RMB195.8 million, up 16.1% year-on-year. Net income attributable to shareholders was RMB280.4 million, a 179.7% year-on-year growth. The open platform strategy accounted for over 30% of total new business, with partnerships contributing over 32% of total first year premium by end of 2023.

• 2024 will be pivotal for development, aiming to expand scale, enhance technology platforms, and strengthen service capabilities. Focus on serving high net worth customers and MDRT. Plan to further expand international presence through M&A and partnerships, deepening in family services like insurance, wealth management, etc.

• Regulatory challenges such as downward adjustment of pricing rate and Filing and Actual Fee Consistency requirement in bancassurance channel. Uncertainties in timing and extent of commission cap implementation in independent intermediary channel. Continued impact of macroeconomic factors on insurance industry performance.

Q: About commission revenue and overseas business details A: Liu Lichong mentioned reported and fire fee consistency requirement likely implemented in April, commission rates for same products may drop 30%-40%. Ben Lin talked about Hong Kong joint ventures: 2 offices established, 10 insurers signed contracts, commencing business; technology differentiation with digital capability. Yinan Hu discussed collaboration with White Group, focusing on capital raising and M&A for international expansion