Huize Holding Limited Q2 FY2025 earnings call

• Focused on a customer-centric approach, evolving customer needs and expanding product portfolio.
• Strengthened the full life cycle service ecosystem, precisely targeting high-quality young customers. Cumulative insurance users exceeded 11.4 million, with approximately 400,000 new clients added during the quarter.
• Launched customized products such as Bliss (Golden Edition) annuity, Xiao Shen Tong 7.0 children's accident insurance, and 'Little Scholar 2.0 Pro' student accident & medical insurance.
• Fully adopted AI agents company-wide, with the expense-to-revenue ratio improving by 16.6 percentage points year-over-year to 23.9%. Introduced the Vibe Coding model in R&D.
• Internationally, Poni Insurtech secured a financial adviser license from the Monetary Authority of Singapore. Vietnam subsidiary Global Care saw a 32% year-over-year increase in both GWP and revenue in the second quarter and launched Vietnam's first insurance KOL platform.

In the second quarter of 2025, Huize achieved a total revenue of RMB 400 million, a three-year quarterly high, with a net profit of RMB 10.9 million. The gross written premiums facilitated on the platform grew 34% year-over-year to RMB 1.8 billion, while first year premiums increased by 73% year-over-year to RMB 1.13 billion. For long-term insurance, the average first year premium ticket size jumped 87% year-over-year to RMB 7,600, and the 13th and 25th month persistency ratios for long-term life and health insurance remained above 95%. The short-term insurance business recorded a 19% year-over-year growth in gross written premiums to approximately RMB 140 million. Long-term insurance accounts for over 90% of the total gross written premiums facilitated.

• China's insurance industry is seeing strong momentum on both demand and supply sides, with AI emerging as a core growth engine.
• Southeast Asia's rapid digital adoption and expanding middle class create structural opportunities, and Huize will continue to embed AI across the value chain and expand its ecosystem in Southeast Asia.
• Expect healthy and sustainable growth in China's long-term protection business and further expansion of international business in Southeast Asia using its proven model and AI capabilities.

• Impact from evolving macroeconomic and geopolitical environments.
• Regulatory changes such as caps on broker channel referral fees and requirements to spread out commissions may affect the business.
• Interest rate fluctuations may impact the attractiveness of insurance products.

Q: Could you add some color on the approaches the company has taken to enhance the team's professional capabilities in selling participating insurance and what plans are in place for deeper cooperation with insurers on the development of participating products? And what's the company guidance for sales performance in the second half of the year?

A: Over the last 2 years, the company has actively promoted training for agents and channel partners. It has been seeking cooperation with upstream insurers to co-develop customized savings products. Currently ranked in the top 3 in distribution channels for participating products in China. Expect continued sequential growth in participating product distribution in the second half of the year.

Q: How does Huize intend to further leverage AI technology to enhance product sales, long-term customer relationship management and achieve greater efficiency and cost control?

A: In customer acquisition, the mobile app integrated with DeepSeek provides customized product recommendations. In underwriting, AI is used to manage risk more nimbly. AI tools can memorize customer interactions for better long-term customer relationship management.

Q: You mentioned that average ticket size was higher sequentially, partially due to participating sales in international markets. How has the sales momentum been in the third quarter so far? And how do regulatory changes impact your business in Hong Kong?

A: Significant demand for Hong Kong products in the last month of Q2, likely reflected in Q3 results. Offshore products are still attractive due to interest rate differentials between onshore and offshore markets. The underlying situation remains attractive.

Q: What is your earnings guidance for the full year of 2025?

A: Delivered profit in Q2 and expect sequential improvement, with a second half profit and meaningful sequential growth in earnings profile in Q3.

Q: How much of your revenue is contributed by international business in the second quarter?

A: On track in delivering the previously given outlook for the year.

Q: Apart from improvement in expense to income ratio, your gross margin also improved sequentially. Could you give us more color on this and how sustainable it is? How you balance between your channel cost growth as well as your premium growth?

A: Gross margin stabilized in Q2, with the overall impact of regulatory implementation in China fully felt. Channel costs and premiums are balanced as the business has transitioned to the new regime.

Q: How is the performance of your demand for the health and protection products?

A: The HMP segment saw a 24% sequential growth in first year premiums from Q1 to Q2. With stabilizing macroeconomic environment and improving consumer confidence, the segment should grow steadily.

Q: What is the main driver of the improved blended commission rate?

A: Mainly due to the improved contribution from customized products, which typically carry a higher commission rate.