China Pacific Insurance (Group) Co., Ltd. (601601) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the Presentation of the New Accounting Standards and Adjustments to Actuarial Adjustments. Currently, you are all muted. Now let's give the floor to the host.

Well, good afternoon, ladies and gentlemen, and welcome to the CPIC Presentation on New Accounting Standards and Adjustment to Actuarial Assumptions. I'm Shaojun Su, CPIC Group Board of Secretary. We have with us Mr. Zhang Yuanhan, CPIC Group CFO and Chief Actuary; and Mr. Xu Zhen, Deputy Chief Accountant of CPIC Group; and [ Chen Sen ], Deputy GM of CPIC P&C and the CFO and the Chief Actuary of CPIC P&C; and also [ Mr. Chenu Juhan ], Chief Actuary of CPIC Life. Well, we just completed the 2023 results announcement. We thank you for your attention. And we have this follow-up presentation on the new accounting standards to give you more information on the switch between new and old accounting standards. And we also, of course, have some assumption changes. So all these will help you better understand our results for last year, especially from the perspective of financial and actuarial aspect. And also, on the other hand, we'll give you a bit more information on the logic behind the new -- I mean, the business in this new area. Well, we will also -- and we have actually released the information from our official website. Now I will give you -- give the floor to Mr. Zhang Yuanhan, Chief Actuary.

Thank you. We implemented new accounting standards in 2023. The change in the -- well, of course, these new accounting standards, I will give you more information on the financial side, but it will not change the essence of our business. And actually, you will see more important between the matching -- matching between assets and liabilities. Now actually, you see our new net assets was up by 0.8% year-on-year, and our undistributed profit was up by 1.5% year-on-year. We reclassified our financial assets as per the new accounting standards. For example, we reclassified most of our Life fixed income assets from AC to FVOCI assets. So both assets and the liability change with interest rates and effective hedging bound to reflect the matching in measurements of assets and the liabilities. We reclassified the dividend yield stocks as FVOCI, which reduces the impact of capital market fluctuation on profits. To accurately measure investment, the fair value change of debt in securities investments classified as FVOCI are excluded from the numerators and denominators in the calculation of investment yield. As mentioned, most of our data instruments changed from AC to FVOCI under the new standards. But the purpose of our debt investments to match assets with liabilities has not changed. And we still -- so we still hold them to maturity, and therefore, to better reflect our investment performance, we use the AC classification for debt investment in the numerators and denominators. Net investment yield mainly consists of interest income, dividend income and the rental income from investment real estate -- investment in real estate. Total investment yield equals net investment yield plus the effects of gains from security trading and gains and losses from changes in the fair value and the impairment losses on investment assets. Comprehensive investment yield equals total investment yield plus the fair value change of [ FVOCE ] and retained earnings in the current period. Insurance contract liabilities under the new standard is similar to that under the old standard, but the scope and methods differ. The scope is bigger under the new standard. Some financial items are included such as premium receivables, fees and commissions payable, claims payable, loans, [indiscernible] insurance policies and so on. The CSM is similar to residual margin, which is the main source of future profits. But there are differences in the measurement method. The residual margin is measured by locking up the assumptions at the time of policy issuance and the experience variances and assumption changes do not directly affect the residual margin. But there is no locking up for CSM and the investment component operation variance, noneconomic assumption changes, investment volatility of business applicable to VFA are absorbed by CSM and amortized over time. The big financial impact of measurement methods under the new standards. Under the old standards, most of the change in equity market were booked as OCI. Most of [ bond ] investments were classified under the AC method, and the changes in interest rates had essentially no impact on either the P&L or OCI, while on the liability side, changes in experience variances, economic assumptions will directly impact profit or loss for the current period. Under the new standards, the users will, for example, the premium allocation method for short-term insurance and the general modeling method, GMM, for long-term traditional insurance and the VFA for participating in the Universal Life. For long-term insurance on the asset side, under the GMM, due to different asset location -- asset classifications, changes in the equity market will mostly impact P&L and the debt market volatility mostly impact OCI. And on the VFA changes on the asset side are absorbed by the CSM. On the liability side, insurance and investment components have been split under the new standards, experience variances of insurance components and maintenance costs will affect P&L while experience variances, investment components and assumption changes will be absorbed by CSM. The P&L statement under the new standard is more structured and transparent, but also more complicated. Under the new standards, income and expenses are split into insurance components and investment components. The latter refers to the amount returned to policyholders irrespective of claims events. Insurance service income mainly includes amortization of CSM, amortization of acquisition costs, expected claims and expenses and the short-term earned premiums. You will be gradually recognized over the lifetime of an insurance policy. Under the old standard, changes in the reserves are also split into insurance components and the investment components, and the investment component experience variances will impact P&L, while the latter will be absorbed by CSM. More performance information can be obtained directly from the P&L statement under the new standard. For Life business, insurance service results includes insurance revenue minus insurance service expenses. For P&C business, underwriting profit equals insurance revenue, minus insurance service expenses minus net income or losses from the reinsurance contracts held minus underwriting finance losses and others. Adoption of the new accounting standard does not change the nature of the insurance business. So most of the volatility will directly impact our profit. You will see more volatility of profit. Under the new accounting standards, the changes in discount rate curve are recognized as OCI. Changes in operating assumptions are absorbed by CSM. VFA is used for [ Par ] Life. All these changes will reduce the volatility of the liability side of the business, but the overall profits are still volatile. In terms of operating results, our group's net profit was RMB 27.3 billion in 2023 and RMB 37.7 billion in 2022, but these numbers are not comparable because for 2022, we only adjusted the figures related to insurance business, but not figures related to investment business. If both sets are restated, then the 2023 net profit will only be slightly lower than that of 2022. The China stock market CSI 300 Index trended downwards in the last 3 quarters of last year, but our quarterly net profits were only slightly affected by the capital market volatility. OPAT is more reflective of our operating performance. OPAT under the new standards exclude short-term investment volatilities in subsidiaries, such as CPIC P&C, CPIC Health. Since net profit on the new standard is more affected by investment market fluctuation, excluding short-term investment volatility of the subsidiaries can better reflect the OP -- operating of the group. Given the uncertainty of the tax policies under the new standards and also profit volatility under the new standards, the income tax rate may also fluctuate. Adjustment of material one-off items includes the difference between deductible amounts for pretax profit over the current period on the average deductible amounts for the preceding years. The group's OPAT in 2023 was RMB 35.5 billion, to which Life contributed RMB 27.3 billion, it was relatively stable, only down a little compared to 2022. Last year, CPIC Life net profit was RMB 19.5 billion. OPAT was RMB 27.3 billion, of which insurance service results and others were RMB 25.9 billion, including CSM, amortization, nonfinancial risk adjustment changes and operating variance. As you can see, CSM amortization is the main source of net profit and OPAT. Investment service results were mainly due to the investment income from traditional insurance accounts being lower than the interest accrued on reserves. Since Par Life and the Universal Life uses VFA, the investment yield and the interest costs were absorbed by CSM. The contractual service CSM underpins future earnings, and the trend is mainly affected by the contribution of the new business, interest accreted and changes to estimates for CSM adjustment. New business contribution is crucial for CSM. Changes to estimates for CSM adjustments include experience variances, changes to assumptions and investment volatility of business applicable to VFA. The combined total of new business contribution, interest accrued and the changes to estimates for CSM adjustments was almost offset by the CSM amortization. So the group CSM at the end of last year was basically the same as that of 2022. The group's net assets attributable to parent at the end of 2023 were RMB 249.6 billion, up RMB 19.3 billion from the beginning of the year. The group optimized asset liability matching and other management to basically offset the impact of the changes to valuation of assets. So we delivered solid growth in net assets last year. That's the end of my presentation. Thank you.

Thank you, Mr. Zhang for your presentation. Now let's enter the Q&A session. [Operator Instructions] And Mr. Zhang will preside over the Q&A session. Well, due to some technical issues, I'm sorry to say for the participants of the English channel, please send your questions to [email protected]. We will get back to you immediately, as soon as possible. Thank you. Well, we have the first caller.

I'm [ Tal Kuin ] from Haitong Securities. I have the questions. Now first question is about the net profit. We made some calculation in 2023. If we look at the quarterly results, the quarterly changes were smaller compared to your peers. But that's for -- you didn't restate for I-9 numbers, you didn't restate -- I-9 numbers. So quarterly speaking, your changes of the net profit was smaller than your peers. So there is a minimal result. Why is it so? And what is the implication for the following years? So that's my first question. And the second question from me is that, in terms of the reclassification of assets. Well, most of your equity assets were still FVTPL. So my question is that are you going to increase the share of your FVOCI equity assets?

Thank you. To answer your first question, now, if we look at it on a quarterly basis, the changes of net profit is smaller compared to peers. Well, it was mainly because of our insurance service results were relatively stable, and CPIC take a lot of attention to prudent investment. So our investment yield was also, well, stable with smaller fluctuation compared to peers. Now of course, the capital market is volatile. If we take 2022, as an example, if we restate I-9 numbers and if we compare that to the end of 2024, if we look back at the quarterly changes for the net profit, we would say that we can calculate the insurance service results, and we can review the investment results, but we cannot say too much for the insurance service results.

Thank you. Let me to answer your second question, the share of our equity assets. Well, under the new standards, you see, if we just look at I-9, given market changes, the volatility will be bigger than the old standards, but we also need to look at the structure of our liabilities. If you look at the structure of our liabilities, if it is VFA, and that's mainly for Par life and Universal Life, the liability changes will be absorbed by CSM. So this type of -- so these equity will be classified as every TPL FVOCI for Par Life and Universal Life. Secondly, the impact of -- we actually did some analysis for the impact from stock market volatility. So we made some adjustments to our equity assets. Some of our equity assets were placed as FVOCI. So in this classification, given market downward change, now actually, this move reduces the impact of a market downturn. Going forward in terms of SAA, we are going to pay more attention to dividend paying stocks, giving it a bigger share. But of course, we need to look at the market conditions. We need to look at the supply of these dividend paying stocks. So that is to say, we need to look at the long-term returns and then also look at the statutory capital requirement and also our risk tolerance and this impact on our investment yield. So it is a holistic review, holistic issue.

Thank you. Let's welcome the next caller. Well, the next call is from Wang [indiscernible] from Goldman Sachs.

I have 2 questions. Two questions. Number one, if we look at the slides on Page 11, you can see a positive impact of RMB 5.6 billion in CSM adjustment. So we have a negative investment impact. And how about the positive impacts? What kind of assumption changes have you made? And also on Page 12, the net profit attributable to parent, now how about the assumption changes on the asset and the liability side? Is it because of the interest rate going down? My question is that, what is your duration for your assets and the duration for your liabilities? Now compared to peers, we would believe your peers have a quite bigger negative impact. So what is CPIC's consideration? Do you place more assets on the FVOCI so as to reduce the impact?

Thank you. The first question, we will have Ms. Chen from CPIC Life to answer your question. Thank you.

As you mentioned, CSM adjustment changes gave a positive impact of RMB 5.6 billion. And also the quality of our business improved, and we also improved our claims management. And the interest rate spread is also giving positive impact and the surrender also gives a positive impact. So taken all together, we have 2 positives and 1 negative. So we have the RMB 5.6 billion from CSM adjustment. Second question, in terms of net profit changes, you can see 2 items, one on the asset side and the other on the liability side. You can see on the asset side, the assumption changes, also have some impact, OCI and also at FVOCI equity changes and also changes in the fixed income assets on the FVOCI. On the liability side, mainly two components: number one, VFA absorption. And secondly is the traditional insurance, and the interest rate changes impact the traditional insurance. Now as you mentioned in your question, now that's mainly because the biggest change comes from the movement of interest rates. Now I would say if we look at the yearly results and if we also look at the quarterly results, you can see the movement on the liability side and the asset side and offset each other. Now as mentioned, the impact from interest rate movement, I mean, impact the asset side and the liability side on the same scale simultaneously. And you also asked a question about the duration gap. Now in the last few years, we have been trying to enlarge or expand the duration of our assets. So the duration gap is narrowing -- was narrowing in the past few years. And in terms of classification, our fixed income assets mainly were mostly classified as FVOCI. So they can better match the changes on the liability -- interest rate changes on the liability side. And also -- in terms of impact on the scale, the scale of our investments were slightly bigger than our liabilities. So this is also a plus in terms of reducing the impact from interest rate movements.

And here, let's welcome the next caller, we have Li Jian from Huatai Securities.

I have two questions. Number one, we adjusted our new business value interest rate, actually, interest rates, investment yield assumption adjusted from 5% to 4.5%. What about some of your other assumptions? And for traditional accounts, your CSM also have an expected return. What is your expected return for CSM? So these are the questions about your expected returns. And also in terms of your reserves, what is the share for your reserves for traditional insurance and Par Life insurance? So what is the share? What is the split? And lastly, your traditional insurance account, well, you have a quite good matching between liabilities and assets. So my question is that is it good in terms of gap -- duration gap? Or is it, well, one-off event in 2023?

Well, for OPAT, well, we based that on SAA and also, we look at our expected yields for our investments. So we do our calculations and set OPAT investment yield in a prudent way. But actually, its impact on OPAT is relatively small. In terms of CSM expected return, we also -- well, when we comply with new accounting standards, we use 50-day average T-bond rate. Well, for your next question, we will have Ms. Chen from CPIC Life to answer your question in terms of the split between traditional and Par Life reserves.

Now I would say we quite have a good balance between traditional and Par Life. Universal Life, less than 10% Par life, 50% and the rest traditional insurance.

Well, let's move on to the next caller. [Operator Instructions] Now we have Mao Qingqing from CICC.

I'm from CICC. Two questions from me. Short-term investment yield applies to business apart from VFA. So does it mean that Universal Life and Par Life does not look at the real term -- real investment yield? So if we actually look at -- we use real investment yield for VFA business than your OPAT will be actually higher. And the second question is that, we say it's quite hard to review the liability of a life business. So your OCI asset accounted for 67% of your total assets. So why is that? And also talk about your traditional insurance discount rate curve.

Our first question, negative answer. Now your question about the -- your second question, actually, VFA investment yield and OCI and the share booked into OCI. Now as we mentioned, we have 52%. So the share is different. OCI share is different from VFA share. We pay more attention to VPA fluctuation. Actually, we didn't quite get your third question. Could you repeat the third question?

Now the first question actually is OPAT. You didn't consider short-term investment yield, excluding VFA. Now my question was actually, are you -- is it possible you have a better OPAT because your VFA accounts did not account for short-term investment volatility?

Now short-term investment volatility is related to the expected yield for OPAT. Now it's lower than the expected OPAT. If it is above it or reach it, you will not change OPAT because our OPAT will need to exclude short-term investment volatility.

Then next move on to the next question, next caller. Our next caller is [indiscernible] Securities.

On Page 3 of your slides, we have the net investment yield total and comprehensive investment yield. So my question is more about the interest rate spread. So which yields can better reflect your safety cushion? Or can you give us a range on your investment yield? Is this 3.2%? I believe it was quite an important indicator for analysts. And secondly, in your annual report, you also disclosed CSM changes on the VFA. You said that CSM -- 65% of CSM will be amortized over 10 years and booked into P&L. So how can we understand that? What do you mean by that? Now currently, your amortization rate of CSM is 8%. Is it going to remain the same or change in the future? And lastly, as we mentioned, the equity asset changes, stock market or stock changes will have more impact on the volatility of your short-term investment result. Now how about your SAA and well, given this low interest rate environment in China?

Now let me summarize your question. Number one, which investment yield is more indicative or is better reflect our operating results given low interest rate environment? Second question from you is that our CSM amortization proportion and also the length of period for amortization? And thirdly, your question is that it is for Ms. Sujan. Now for the first two questions. Now in terms of total investment yield and comprehensive investment yield, now total comprehensive investments will fluctuate as the capital market fluctuates. But we pay a lot of attention to the net investment yield. So on top of the net investment yield, we can see some fluctuation on top of that as the market fluctuates. So I would say net investment yield is most important for insurance company. But in terms of forecast total, I will not give you a specific number for our forecast, but I can only say that the investment yield will fluctuate up and down to some extent, where we do have our requirements in terms of how much it can fluctuate. Second question, in terms of amortization of the CSM, well, it is closely related to our business mix. It has a lot to do with our amortization factor. That is to say 65% of the CSM will be amortized in the following 10 years. Now in terms of -- yes, you mentioned, last year, the amortization rate of CSM is 7.4% for last year 2023. No, it's, of course, in line with our current big mix. And Mr. Xu will answer your third question about the -- well, given the low interest rate environment, the share of our equity assets and also its future outlook. Now actually, after 2019, CPIC Group started to research the matching between liabilities and investments. Now equity and -- well, equity assets is a big component of SAA. So how big a share it should be? Well, it depends on the liability profile of each of our accounts. Now in recent years, if you look at our annual report, you will see that our equity investment and equity assets have been increasing in terms of share of the total SAA, aligned with our dumbbell style investment strategy. On the whole, our share of equity assets is in a quite reasonable level compared to peers. I would say we pretty much are on the same level in terms of the share of equity assets. Going forward, we would make more sophisticated management for equity assets because as I mentioned, equity investment, equity assets allocation is -- must be aligned with the profile for different accounts. So the share may be higher for Par Life account, Universal Life account under the new accounting standards. And we are going to have a bigger share of high dividend paying stocks. So if there is a very good supply of this kind of dividend paying stocks, we will make more allocation in that regard. And going forward, we are going to pay more attention to this kind of high yielding, low volatility equity assets. So we will make it more diversified. On the whole, I would say, the overall, the total share of our equity allocation will not change a lot, but we will make it more diversified, make it more targeted.

[Operator Instructions] Then we have Xiyu Sun from Guotai Junan Securities.

I have 2 questions. We made some calculations and we look at the insurance service results and the investment results. We see that insurance -- so these results actually had a negative impact. So why is that? Now second for P&C business. Now for P&C business, how is your reserves? For example, what about the reserves for unsettled claims? Would it be released to positively impact your profit?

Now to your first question, I'll give you a brief answer, and then [ Ms. Chen ] will give you more information. Now our insurance service results in 2022 and 2023. Now first of all, both numbers were positive. Now this year, only declined a little bit, it's mainly because of the CSM amortization declined a little compared to last year. And -- well, then [ Ms. Chen ] maybe more information on that.

Now you see some negative variance because of onset of some other expenses. Now [ Mr. Chen Sen ] from P&C -- CPIC P&C. Now earned and unsettled claims reserve. Now the share, I mean, remained positively stable for the whole year. Now auto slight decline, nonauto, maybe a little bit uptick. We didn't split between Life and the P&C business. It's because under the new standards, the reserves for unsettled claims can be reviewed on the Table 103. So it's all disclosed there. And we also noticed some investors -- well, some of the investors are not very familiar with our financial reports. Now if you have more questions, you can send an e-mail to us. We will give you a reply over e-mail so that we'll all be on the same page regarding those financial numbers. We can do that offline. Thank you.

Then let's welcome the next caller. We have [indiscernible] from Morgan Stanley.

I have a follow-up question on reserves. For non-short-term insurance, reserves will actually give you a positive impact in 2023. In 2022, there is a, well, more than RMB 90 billion positive impact. And for 2023, the impact is more than RMB 90 billion. For 2022, the number was more than 20 -- worth more than RMB 52 billion. So my question is how much of it comes from Universal Life and Par Life? How much of it comes from traditional? And how will they impact the VFA and the GMM?

I would say it's pretty much 50-50. So that is a combined -- VFA and the GMM combined will be more than RMB 93 billion. So traditional life, slightly smaller, but close to 50-50.

Now next caller, that is from Citic [indiscernible].

Now my question is regarding the matching of asset liability matching. Well, on a yearly basis, the matching is good, but quarterly speaking, the matching is not so good. So is it because of some assumption changes or OCI quarterly fluctuation? How do you think about that quarterly fluctuation of OCI?

Now usually, we look at NBV versus CSM for new business. Now for CPIC Life, the ratio is quite different from peers.

No, your ratio is very close, but the peers have a different picture. So my question is why is this difference? So why is your NBV and the CSM so close?

Our Chief Accountant will answer your first question. I will answer your second question. Now the first question about ALM and this yearly matching and the quarterly matching, on the whole, quarterly change in terms of scale is under control, I would say the matching -- or the mismatch is less than RMB 10 billion. But our overall scale is more than RMB 1 trillion. So I would say the change is not significant on a quarterly basis. And [ ALM ] in interest rate sensibility and it's offsetting is well under control. On the liability side, we pay mostly attention to T-bond rate plus risk premium. But our actual liability have T-bond and also credit bonds. So credit bond yield will also be impacted by credit spread, which is time sensitive. So it will impact a little bit on our valuation and the liability side. So I would say sometimes, at some different time period, the credit yield cannot be totally offset. That is to say in terms of ALM liability, we look at a 50-year -- a 50-day average yield plus current period changes, so there is some difference. So that is why at each quarter, you can see some slight changes for assets and liabilities. It's only natural. Now second question. Now actually, I have mentioned that in my presentation, CSM 0 and NBV is closely related. NBV includes capital impact and tax impact, and discount rate is higher than CSM 0. So usually CSM 0 is higher than NBV. Secondly, we changed some of our economic assumptions. CSM 0 is not and will be impacted progressively by the changes to assumptions. So we choose the CSM 0 before the adjustment. Before the adjustment, the CSM 0 increased by 31% and NBV up by 39%. That's the -- the change is mainly because of the change in business mix. So our NVM increased a little bit. So NVM increased around 26% and CSM 0 increased by 33% and the 31% we mentioned for times 1.3% is basically equal to 39%. So you do the math. So I would say these are ballpark numbers. The actual formula is very complicated. So basically, the NBV and the CSM equal each other.

Thank you. Let's welcome the next caller. Now we have [indiscernible] from UBS.

I have 2 questions. Number one, on Page 13, you mentioned the 27 PT increase for NBV growth because of the business mix change, but last year, there's strong demand for protection business -- for savings business. So why is that? why is the change in business mix? And also, you mentioned experience variance will be absorbed by CSM. But on Page 9, you can still see some short-term investment fluctuation. So how can we understand that? And lastly, when we do forecast, can you -- can we release this kind of quarterly NBV numbers so that we can -- and so we can have an easier job when we do NBV forecast for this year.

Well, to answer your last question, can we disclose the quarterly NBV numbers? I will -- I need to consult our Investor Relations team. And in terms of the business mix changes this year, mainly twofold: number one, in terms of distribution channel, bank insurance company -- bank assurance channel for this year, the RP business increased a lot, SP business decreased a lot. So that's a very big plus for NBV. Secondly, our agency channel, their product also changed somewhat. So NBV margins also benefited from that change. So on the whole, I would say these business mix change and also productivity change benefited our NBV margin. So that's to answer your first question. To answer your second question. First of all, on Page 13. On Page 5 -- actually on Page 5. You mean investment component -- on the VFA, investment component will be absorbed by CSM. No, that is designed by rules. VFA, as we know, now the logic for that is that the investment will fluctuate for these volatilities. Well, on the liability side, there will be some absorption. No, I will not dwell too much on that because VFA and that's, well, a requirement from the new accounting standards. On Page 13, in terms of OPAT fluctuation, we have an expected investment yield for OPAT and the actual investment yield for the expected yield, there will be some kind of gap. So there is a gap. On the whole, the expected investment yield is related to our SAA. So -- but the two concepts are different. If you have this type of questions, please contact our IR team. We will give you an answer in due time.

Now in the interest of time, we only have time for 1 last question. Now the last caller. Well, we have [indiscernible] from Guangdong Development Securities.

Now my question is, we changed our economic assumptions. Embedded value went down. Long-term interest rate is still low in China. So my question is that going forward, are we going to further adjust our investment yield? Currently, it's 9% for risk discount rate. Are you going to further reduce it?

Now to answer your question, at the end of 2023, we lowered our investment yield -- expected investment yield or investment yield assumption. Well, that's based on SAA and the actual situation of our investment. So we did some calculation and made some judgment call. We lowered our investment yield assumption. We also noticed that after the change in our investment yield assumption, this year, you can see there are some -- quite some changes in the interest rate environment in China. We will pay attention to that, and we will actually adjust our SAA accordingly. If necessary, we will further adjust our assumptions [indiscernible] on the assumption side, and also when we make the assumptions, we adjusted our risk discount rate assumptions. Previously, it was 11% set at 2013. It's already 11 years ago. So when we set these risks in discount rate, we will mainly look at the -- well, the market interest rates and also risk premium. Of course, you can see interest rate is going down and is going to go down further. And if we look at the market conditions in China, I would say previously, the risk premium is 6.8% to 8.3%. So it's relatively high in terms of a risk premium. And actually, the average risk premium for Asia listed insurance companies is 5.5%. Now CPIC is quite a prudent company, quite a mature company. So we are not a start-up company. So it's different for us. We believe we have a sophisticated governance structure. We have a stable investment performance and diversified channels. So we can have lower risk premium rates. So given all that and given the levels of our peers, we lowered our risk premium to 9%. I mean we lowered our risk discount rate assumption to 9%. Going forward, we will continue to look at those fundamentals for these assumption changes. And if necessary, we will readjust this risk discount rate.

Well, investors, analysts, ladies and gentlemen, that's all for today. Thank you, Mr. Zhang and all my other colleagues for your answering and also thank you all for your attention. Now I believe you might still have follow-up questions. We don't -- we only have 1 hour, so it's not enough time to answer all your questions. But we can -- of course, we can follow up on those questions after the meeting. If you have more questions, you can contact our Investment Relations team. Well, that's all for today. Thank you all for your attention. Thank all my colleagues. Thank you.

That's the end of the teleconference. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]