Chunlin Wang
Hello, everybody. Thank you for joining us in the second quarter 2016 earnings conference call. Now, I will give you an update of our financial and operational results in the second quarter of 2016 and our CFO, Mr. Peng Ge, and I will take your questions at the end of the report. In the second quarter of 2016, our total net revenue beat guidance again and grew 58.6% year-over-year. Our insurance premiums grew 46.1% year-over-year, outpacing the industry growth of 29.5%, evidencing the further strengthening of our market position during the quarter. Now, I would like to review the highlights of our various business segments. Firstly, life insurance business. Net revenues from our life insurance business grew 207.9% year-over-year during the quarter, while insurance premiums from the business segment grew 61.5% year-over-year in comparison with an industry growth of 44.7% in the life insurance market. Noticeably, our first year of premiums from long term life insurance product grew [208.5%] year-over-year, accumulated first year premiums from long term life insurance products in the first half of 2016 was 1.5 times more than that in the whole year of 2015. Besides 13 months' persistency ratio, maintained at over 89% for two consecutive quarters laying a solid base for the steady growth of our renewal life insurance business in the future. Secondly, our P&C insurance business, despite a continued slowdown in the P&C insurance market with only 5.3% growth during the quarter, our P&C insurance business increased 44.2% year-over-year in terms of insurance premiums, of which insurance premiums generated by our P&C insurance agency segment and brokerage segment were now 40% and 63.8% year-over-year respectively, leading to a 45.2% and 38.4% year-over-year growth in net revenues in the two business segments. Thirdly, our claims adjusting business. Our claims adjusting business grew steadily with net revenues up 23.5% year-over-year. We believe that our strong results in the second quarter were attributable to both internal and external drivers. Since early this year, we have been focused on various strategic initiatives to achieve our eight-year target of over RMB100 billion in insurance premiums. In the meantime, the market and the regulatory evolution has presented favorable opportunities to us. Now, I would like to further expand this in five aspects. Firstly, favorable regulatory policy, since the 2015 amendment to the insurance role took effect last year which simplified procedures for the establishment of the insurance intermediary companies and removed the certificate requirements for an insurance agent, broker, or claims adjuster to conduct insurance practice. We do feel intently that the spring for the insurance intermediary industry is coming. Meanwhile, as pricing deregulation is strong for life insurance and auto insurance weakened, the insurance market has never been as dynamic and vibrant as today, which also presents tremendous growth opportunities for the insurance intermediary sector. Secondly, strengthened organizational and sales force expansion; we've made steady progress in setting up provincial branches in these markets. As of June 30, 2016, we've got our branch in Anhui province up and running and are in the process of getting our branches in Guangxi, Yunnan, and Qingdao ready for operations, while preparing to enter Inner Mongolia. We are also constantly searching for top sales agents and teams in the market and making efforts to attract them to join CNinsure. During the first half of 2016, we had two more new sales outlets and 35,000 new sales agents. Thirdly, effective marketing program in the second quarter of 2016, CNinsure invested over 94 million on marketing, mostly spent on granting subsidies to sales agents. Our marketing strategy was well received in the market and proved to be quite successful in preparing our business growth to an extent that even better than we originally expected. Fourthly, continuous contribution from the CNpad Approval; by the second quarter of 2016, over 130,000 copies of CNpad App were downloaded. During the second quarter of 2016 over 28,000 active users made transactions on CNpad and insurance premium generated in the year through CNpad amounted to over RMB750 million, contributing 22% to the total insurance premiums. The number of downloads and volume transaction on CNpad App was somewhat impacted by the version transition started from the second quarter of 2016, but up-to-date we have effectively concluded the transition in half of our sales network and we expect to complete the transition nationwide by the end of September. Following the transition, we expect to roll out a new round of marketing activities to promote the download of CNpad App. Fifthly, increasing cross selling activities as a result of organization combination of our life and P&C insurance agencies which we pushed forward back in 2013. As of June 30, 2016, 90% of our insurance agencies have the capacity to cross selling both P&C and life insurance products. The synergy as a result of the business combination has helped improve the profitability of our agencies and the access to more diversified product offerings has also enabled agents to earn more income and increase customer stickiness. The strong growth in the second quarter of 2016 is a testament that we have the right strategy and have made the right decision. Looking ahead, we will continue to expand our sales footprint and implement a flexible marketing program to expand market share. We expect our topline to grow by approximately 40% in the third quarter of 2016 which will be another firm step forward towards our goal of becoming a RMB100 billion size company in terms of insurance premium. Now, our management will open the floor for your questions.
