China Reinsurance (Group) Corporation (1508) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon. Welcome to attend the China Re Group's 2021 Annual Results Announcement. I'm the moderator for today's session, Vice President of the China Re Group and General Secretary of the Board. [Foreign Language] I'd like to introduce you the distinguished guests who are attending today's event. The first one is in Beijing on the China Re headquarters, we have with us Mr. Yuan Linjiang, Chairman of China Re Group; Mr. Zhuang Qianzhi, Vice President of China Re Group; Chief Actuary of China Re Group, Mr. Tian Meipan; General Manager of China Re P&C, Zhang Renjiang; General Manager of China Re Asset Management, Mr. Li Wei. Because of the pandemic control and prevention event, we have with us Mr. Miao Jianmin, who is the President of the China Continental P&C. Today's event is going to be divided into 2 parts. The first part is going to give the floor to Chairman, Yuan, who is going to give us a brief introduction towards the performance of the China Re Group in the year 2021. And the second part is going to be Vice President, Zhuang Qianzhi introduction toward the performance looking into the future. After that, the floor is going to open up for the questions. So please be noted that this annual result announcement is only open to questions on the telephone. Now I'd like to give the floor to Chairman Yuan.

Respectful investors, distinguished analysts, dear friends from media, good afternoon. Welcome to the China Re Group's 2021 annual results announcement and the past [ 1 year ]. It is a year for the China Re Group to show the sales of the 45-year period, and we have achieved quite good stats for the 45-year period. I'm going to give you my introduction from 2 perspectives: the results and also our strategy. Starting from the performance, the performance has been divided into 3 parts. The first one is the steady growth of the premium and also a solid market position [Technical Difficulty] [ gross written premiums ] of the group is registered at RMB 162,732 million. The net profit attributable to equity shareholders of the parent company is seen a 11.4% rise. The ROE is registered at 6.84%. That is 0.5 percentage points growth. Earnings per share is RMB 0.15, that is equivalent to the 7.7% dividend yield corresponding to the share price. The second part I want to introduce you is a solid market position. We have the top first global reinsurance performance. And in the year 2019, we have dropped from the eight to the seventh, and starting from last year, our global reinsurance ranking starting from the seventh to the sixth. We were selected by the Fortune 500 for the first time, and we are also the Brand Finance Global 500 in 2021. Among 1,800 companies, which were being registered in the China bank and insurance management committees, we are one of the top. The third part, I like to introduce you is that our business structure improvement and robust risk management. The overseas business is accounting for 1/3 of the total performance, and we have distributed the risk across the group. The domestic business is growing from 16.7% to the 37.6% last year. Currently, this part of the business is occupying for around 50% of the market share in the market. The non-auto business is occupying for 48%. That is to say, it is 5% above the industrial average for the different entities. And the Insurance sector, the general solvency ratio is above 20%. And for the consecutive years, we were being ranked by the S&P Ratings as a top level A [ plus ] company. I'd like to give you an introduction of our company's strategy by following 5 aspects. The first one is the strategic implementation of a 45-year period. In the year 2016, we came up with a strategy, which is One core and four pivots and five upgrades. And for the first time, we have adhering to the reinsurance business as the core during the 35-year period. Our domestic market standards has been consolidated while our strength comprehensively has been improved in 2021, while we are inheriting the 35-year plan, combining with the changes in the market and the real-time scenarios we have put it into 1 core, 4 pivot and 5 upgrades, what we call 145 strategy. The one core means that we are still going to adhering to the reinsurance business as a core, while the four supporting pillars means that in the year 2019, we came up with the platform technologies. And last year, we have upgraded it into 4 pillars that is to say product innovation, platform acceleration, technology empowerment, [ global ] linkage. China Re will strengthen capacity building, enhance group's control and lay a solid development foundation. We have made the product innovation as 1 of the 4 pillars. The 5 upgrades refers to the China Re will make upgrades in value, data, ecosystem, talent and culture. Our target is to fulfill the requirement of the State Council and build an accelerated a data-driven development and ecosystem layout, create a world-class comprehensive reinsurance group. The second part is innovation-driven business models and actively servicing the national strategies. In the year 2021, we came up with around 200 different products. The total service and P&C sum insured in serving related to key national strategies is around RMB 20 trillion. And the market share of the health insurance business serving Healthy China strategy is around and larger than 40%. The first part is about the catastrophe risk. Currently, with the changing climate, the catastrophic change is one of the major pillars for reinsurance efforts. China Re Group is the major channel for our country to manage the catastrophic risk. For example, the major raining event and flood event in the Henan Province, the insurance industry has off taken for around 10% of the disasters. And let's look back in the year 2008, the insurance company only covered for around 0.2%. That is several thousands of times of the previous figure. There is growing responsibilities for the insurance industry to shorter the disaster in our society. China Re Group has claims for around 7% of the claims in the Henan flood disasters, and we are also one of the only reinsurance companies appeared in 80% of the disasters. We are also working as a tie. While we have launched their first catastrophic bond in the Hong Kong market because the catastrophic risk is quite huge, which needs to be shouldered across the global market. We have rationally redistributed the risk in China into the global capital market. This is a major step for the Chinese market see how to deal with a potential catastrophe. The second part of the business is what we call the Healthy China strategy. Actually last year, we have came up with around 200 products and the general participants is around 100 million. By using the technical support and given the key resources, we have paid for around 80 different projects covering 50% of the insurers. This is going to effect the public a affordable price, especially for the lower-income group and also the elderly people and offer the special groups of the people, we provide them a special and unique drug. And the third strategy and third example is what we call the nuclear reinsurance. We all know the nuclear power is one of the major regenerative and renewable energies in China. China Re Group is working together with 29 different insurance companies. And after 20 years of efforts, we have built a nuclear community as one of the pillars and flagships in our industry -- in our country. For all the nuclear power, which is under operating and also the overseas assets and for 240,000 frontline workers, we have hastened and facilitated them to achieve around 2.5 tons of the carbon reduction. The fourth example is the IDI sector. We all know the housing is one of the major pillars in our country. The management on the housing sector and the real estate sector is occupying for the 60% of the household income. China Re Group has innovated the Shanghai models of our IDI business and promoted the international market. If there is any real estate quality-related issues, we are going to compensate. For the first step, we have collaborated with the Shanghai Municipal Government and create Shanghai IDI model, which were later promoted in Beijing and across the country. Currently we have undertake 1,400 different projects. Now total construction are year is reaching 1.4 trillion square meters. This is a very huge market with roughly [indiscernible] performance. And the fifth sector is the belt and road initiative construction. Under the constructions and under the support of the [ BRVC ] we have boomed. China Re initiated Belt and Road Political Violence Consortium. Last year is that for the first year that we have operated the [ official ] mechanism, which has provided risk coverage for RMB 16.1 trillion our assets for 19 Chinese interest abroad projects. We have also extended the product internationally in Singapore, in Britain Lloyd's, we have formed the Belt and Road Political Violence Consortium through a coordinated development between Beijing, Singapore and London, we provided a time risk control for the Chinese companies as well as the foreign companies. This marks a major step for the Chinese company to the globe, providing a very important risk share. The third part is that China Re has launched the digital China Re 2.0 for digital transformation. We have understanded that the technological innovation and also the data driven industry is becoming one of the key drivers for the high-quality development of the insurance sector. So in 2018, we have issued our digital China Re 1.0. We have also invested more during the 13th 5-year plan and we have made great achievement. And also, we have doubled our staff for IT and tripled our investment of IT. In 2021, we have upgraded our technology, and we have also covered the digital China Re 2.0 for digital transformation. So we want to build the platform and build the ecosystem after digitalization. So by innovation and also the institutional reform, we try to have a greater picture of digitalization. At the same time, we have invested more during the 14th 5-year plan. The annual growth rate of the investment has reached about 15%. So currently, that the result has also been seen quite obviously, I can give you example of China Re [ CRM ]. This is the first insurtech company to focus on catastrophe risk management. Though for China Re CRM, last year, the revenue has reached about the RMB 23 million, which also made profitable in the fourth year. So for many years, the insurance industry in China, we have always bought the catastrophe models from the foreign insurance companies. But for China Re CRM, since 2018, this company has been leveraging the technology development of the catastrophe risk management with the great support of these industries. We have consistently developed the model of the earthquake, typhoon and flood risk management. This is also quite innovative. Also gradually, we try to make this model with commercial application. It is warmly welcomed by the market, especially that the China earthquake catastrophe models 3.5 has already been listed to be the only one for the 13th 5-year plan technical achievement, and we have also received the national funding for that. The fourth one is on the internationalization, global presence and management expertise. Local presence is natural for all the insurance and the reinsurance companies. So all the reinsurance companies in the world have their global presence. From the 12th 5-year plan, China Re has entered into the global market. In 2011, we have entered -- we have acquired the Chaucer with hundreds of the year history. And also, we have become the first qualified Chinese reinsurance companies. During the 13th 5-year client, we try to make more global presence. For example, in Singapore, Hong Kong, we have also set up our reinsurance companies. Especially, I want to say that in 2018, after we acquired the Chaucer of U.K., our global presence has become unprecedented. Currently, we cover about 11 countries of companies. The overseas primary revenue accounts for 18.9% of our global primary revenue. The global investment asset accounts for 25.9% of our overall investment portfolio. It has also become the Chinese reinsurance companies with the most global presence, acquiring Chaucer for about 3 years -- in the past 3 years in our business, operations and personnel, we have been quite stable and also quite profitable. Especially in 2021, the Chaucer performance was significantly better than the average of Lloyd's. And also the return has reached about -- return on economic capital has reached 14.8%. So currently, we plan to be more integrated. We try to build Chaucer into our overseas development and management center as well as an international center. We try to connect the domestic and international market, so we can achieve a better synergy. So #5 is on the risk management and the solid foundation of headquarter management. In order to make sure we implement the strategy of 145, we want to strengthen the function of the headquarter. So that means in management, in service and in compliance. So for the continues in headquarter management, we want to set up the planning implementation offices of the group. Last year, we have also set up the China Re institute by hiring some foreign experts of China. At the same time, we also built the center for the innovation. So in this way [Technical Difficulty] the better strategic layout of our business. As for the risk management system, we try to have the see-through of the risk. There is a 3-year work plan of the risk management. At the same time, by preventing the risk, we want to take effective measures of the service. That means for example, we need to attract the talents for the reinsurance talent. I think we have a unique advantage. Our overseas insurance talent accounts for more than 40% of our overall reinsurance talents, especially in Chaucer, we have more than 500 foreign experts. In China, our reinsurance talent accounts for about 50% of all that in domestic market. Among our global partners, we have attracted more partnership. For example, with the government ministries, provinces, SOEs and also the Internet companies as well as the global large insurance companies, we have signed almost 100 partnership agreement. So now I would like to invite Zhuang Qianzhi, our Vice President, to talk about our business analysis.

So distinguished investors, analysts, dear friends from media, good morning. So now I would like to give the presentation of the business analysis. In 2021, like for the China Re P&C reinsurance. L&H reinsurance, P&C primary insurance and asset management, we have been taking the market opportunities and adjust our business structures. We have also been quite selective of our business portfolio. We continue to improve our management with a relevant good performance. So first of all, if we look at about the P&C reinsurance. In 2021, in the P&C the revenue and profit have made the historic record since 2016, but overall revenue has reached about RMB 51.9 billion, a growth rate of 7%. The net profit, the non-premium revenue, RMB 35.7 billion (sic) [ RMB 35,027 million ] a growth rate of 5%. Overseas business premium revenue RMB 16.8 billion, a growth rate of 12%. And for the P&C reinsurance, the net profit has reached about RMB 2.69 billion, a growth rate by 47.9%. The average revenue growth rate has reached about 9.76%, about 2.48 [ percentage points ] up, and also that for the growth of the domestic business. The reason for that is that we have this opportunity of the higher interest rate to expand our high-quality assets and to make it more profitable. The second reason is that in 2021, we continued to have a better cash flow management to better leverage our assets to generate revenue and perhaps with a better investment returns. As also in 2021, for the non-revenue growth about RMB 35.7 billion (sic) [ RMB 35,027 million ], a growth rate of 5% by insurance for the auto industry that the primary revenue has dropped by about 15.7%. The reason is -- 17.5%. The reason is because of the comprehensive reform of the auto industry. And also growth of agricultural line growth rate of 3%. We have also been more on the policy side of the agricultural business. We have also been developing other non-commercial ones and be innovative of the rapid growth of the other non-auto lines. In 2021, the commercial agricultural insurance, the non-premier revenue has been more than RMB 2.5 billion, the market share about 24%. For the non-agri, non-auto insurance, the growth rate of about 20.1% which has offset the stop of the auto insurance revenue, and also the combined ratio and also about 99.78%, 99.95%, which was compared with the previous year. For the domestic business, actually, we have improved the business mix. In 2021 for the non-auto lines, about RMB 26.9 billion, a growth rate about 14.4%. And in 2017 -- from 2017 to 2021, as you can see, the annual CAGR has reached about 20.3%. For the non-auto business, the percentage of the add has increased from 58.8% in 2017, up to 76.9% in 2021. And also that for the new business, for the emerging lines, you can see that in 2021, for the non-premier revenue, about the RMB 2 billion, up by 29.6%. For the emerging line the percentage is about 7.8%, a growth rate of 0.9% higher and also for the overseas business as well as about the the construction surety insurance and also the qualities as well as the catastrophe insurance, these emerging lines have gained more premium growth for the emerging lines. This is the focus of our strategy for the future. On the one hand, emerging lines is consistent with the national strategy. It also meets the requirement of upgrading of the industry and consumption. So definitely, there is a great potential of emerging lines. On the other hand, emerging lines has also been combined with our product innovation, which we can fully leverage our advantage in the data technology and platform. We can meet the tech requirement from our clients and also make us more competitive in the market. At the same time, the emerging lines, although in the short term, it's not that obvious, but it has a potential for growth and the contribution to profit is also very high. For overseas business, in 2021, the total premium revenue, about RMB 16.8 billion, a growth rate of 12%. Overseas business has benefited from the rapid growth because we leverage the market. And also, especially with the higher exchange rate, we try to expand the scale of our high-quality assets. In 2021, Chaucer business have achieved the revenue about RMB 13.3 billion, a growth of 20.7%. At the same time, we also want to focus on efficiency. We optimized our structures and also to [ think that the business ], which is not that profitable. In 2021, besides Chaucer, for other overseas business the revenue of premium has reached about RMB 3.4 billion, down by 12.1%. So we have been benefiting from optimizing the structure, the efficiency of the investment of the overseas is much better. In 2021, the overseas business that the overall that combined ratio has dropped by 11.4%, down to 97.32%. Chaucer combined ratio has dropped 8.83% down to 94.81%. So other business except Chaucer dropped 15.13%. In Singapore that since the day 1, it has also made the profitable of this primary revenue. So now I would like to talk about L&H Reinsurance. In 2021 for the L&H Reinsurance, the profit has been under steady growth. The non-premium revenue has reached about the RMB 69 billion, a growth rate of about 4.2%. The net profit is RMB 2.7 billion, up by 3.7%. The average weighted return of the asset has about 11.3% -- 10.8%, up by 0.23%. The Beijing structures of the reinsurance has been optimized. While the domestic protective type of the business, domestic financial reinsurance despite the sluggish growth has achieved a quite cool competitive further demonstrated the proportion increased by 6.5 ppts, while the overseas business is demonstrating a very positive effect. The proportion increased by 2.7 percentage points. Let's look into the surety type of the product, China Re Group, as one of the major players of the health insurance, it has been focusing on the protection-type business. In the year 2021, we achieved a very good momentum of the protection type of business, the reinsurance premiums has achieved RMB 26 billion, that is 25.9% growth. The premium growth comparison is reaching 37.9% and the income of the premium has been surpassing the traditional insurance industry. We have been working on the traditional lines and innovative lines. In the traditional lines, we are trying to get the major business opportunities. We have came up with the yearly annual product for over 20 different types. For the innovation type as the only promoter for the [indiscernible] business, we have covered for around 50 million people that has around of 50% of the insurers across the world. We also covered some of the clinical disease, dental disease, among other different insurance products. Across the year, the total insurance product has been guaranteed. And for the short-term business, the comprehensive figure is around 9.5% The total undertaking is around RMB 415 million. We have a key advantages in this field. We are trying to build competitive advantages in the traditional areas. The China Re's L&H sector has a professional talented team. We are the leader for the major risks and major disease products. The product we have developed is very welcomed by the market. At the same time, we have a very aging data advantages. We've been participating in the birth rate and also the medical insurance Res. Based on the big data we have came up with a very good pricing models. Thirdly, we are combining the industry together with innovation. We are consolidating the advantages in the special drugs insurance. We have set up onstream cooperations with the pharmaceutical companies, and we are going to play a first mover advantages in this reinsurance sectors. Now I'm going to introduce you the P&C sectors of our performance. In the year 2021, we have achieved active business transformation, the total primary premium has grown by 9.6%. That is around RMB 43 billion, which was impacted by the competitive auto insurance reform as well as the active narrowing of the surety lines. Between this complex situations, we are trying to transform the company to adjust into the new changes in the industry. And in the auto lines, we have promoted the risk controls. The total cost [Audio Gap] the COR has been dropped from 110.28% to 106.64%, and in the non-auto sectors we have launched key non-auto lines, focusing on the surety products, disaster products and also the health liability sectors and also the accident and health sectors. In the year 2021, the non-auto sectors, which has a primary premium of RMB 20 billion, occupying for 40% and the third party is that we have our pros and cons and the total surety registered is 47 -- RMB 54 million. And the nonperforming and the bad debt ratio has been decreased to 6.98%. We have also actively applied to the high quarter development of the P&C industry. We have been focusing on the findings of the business procedures. We are operating internally on the process management internally, treating the huge pressures in the P&C primary sectors, we are using the premise of [Technical Difficulty]. Then finally, let's look at the asset management sectors. In 2021, we actively seized investment opportunities and equity investment, which has outperformed the average in the market against the turbulence in the year 2021. The total investment yield has been registered at around 5.17% and also the net investment yield is registered at 4.57% (sic) [ 4.59% ]. In the year 2021, the comprehensive returns on a secondary A-share equities, surpassing the CSI 300 Index 190 bps and the comprehensive returns on the secondary H-share equity surpassed the Hang Seng Index for around 980 bps. By the end of December 2021, the total investment asset is registered as RMB 32.1 billion (sic) [ RMB 321,113 million ], that is 4.3% compared with the year 2020. We have sticked to a healthy and balanced allocation. The fixed income investment is occupying for 80.1%. Equity investment is occupying for 17.5%. For the investment and fixed income investment opportunities, we have accelerating our investment in the loans and receivables as well as consolidating the investment income. In terms of the equity and fund investment mix, we are trying to create the opportunities in the equity investment market. We have reallocated our investment in the stock market by optimizing the investment strategies. We have achieved a quite good performance. This is the general introduction towards the performance of China Re Group in the year [ 2021 ]. We are going to give the floor to our Chairman to give you our outlook and the future.

Thank you. I'm going to give you the -- my understanding towards the market trends. We believe there is still huge room for the further development of the insurance industry. So we are going to look at the 3 perspectives. The first one is the macro economies. Our country's economy is very resilient. And in the year 2021, the total GDP growth is around 8.1% leading the world in terms of the GDP growth. While the GDP per capita is also growing that is indicating a long-term growing trend in our national economies, leading up paving the foundation for the insurance industry. From the industry's part, the insurance coverage is while fallen behind the actual demand from the market and there is a huge management demand from the society strong management has created a very good environment for the society. China is the top 2 insurance market in the world, and China remains one of the major areas for the insurance industry to grow. And from the trend in the market, the insurance company position themselves from a mere risk taker to a comprehensive risk manager from climate centers to the biological centers. And from the technical impartment, we are going to see this -- we will see our opportunities see somewhat up. Insurance and reinsurance, you have a large room to be participating in the national strategies. From another perspective, the risk management as well as the transformation of the company is still facing huge pressures starting from 3 perspectives: macroeconomies, it is complicated globally speaking, and we are facing affiliation unprecedentedly in 100 years. The COVID-19 pandemic is still reaching across the world. The uncertainty factors across the world is increasing from the industry. Extreme climate disasters, causing a lot of catastrophes across the world. The capital market is also turbulent while the increase of the premium is slowing the abilities of profiting is also provisions. The insurance industry has been stuck in the valley from a short period of time, from competitiveness and the market, the top-level companies has the partner advantages which is accelerating the differentiated group for the small and medium-sized insurance companies. The benefit of the big data and the insurance companies is seeing a very distinguished dwellings in the market, especially the foreign investment market is accelerating their leverage in the China insurance and reinsurance market, creating a very competitive environment in the Chinese domestic market. We are under huge pressure for the transformative growth. Speaking to opportunities. Our strategy is prioritize stability, been focusing on the major business sectors and stabilizing our market share as well as our performance the risk control should be strong and healthy. During this wave of transformation, we are going to allocate the different resources in our environment and the precise management in the coordinated development. We are going to coordinate different factors, starting from full perspective. The first one is that we are going to reinsurance play as key rules and serving the major strategies for the country, focusing on the [indiscernible], health sectors and also the new energies of auto insurance with the second growth point for our business. And we are also encouraging our first layer advantages in a busy environment. We are going to grow these new opportunities. Second, we are going to open up the resources at the same time, we are going to coordinate the development between the industry and outside of the industry. This is going to help us to allocate in the auto sector as well as to open a space in the health insurance and nursing insurance products, and we are going to intensify the rules of the third-party. Thirdly, we are also going to focus on the digital technologies, growing in low-carbon healthy areas as well as the innovative opportunities in these areas. Through the digital transformation, we are going to lower the down cost and raise up the profit. While we are trying to strengthen the product design we are going to consolidate our industry's market shares. Fourthly, we are going to foresee the potential risk and trying to increase our abilities to deal with the risk. This is going to help us with the digitalization of the process to make sure the risk management is something tangible and currently manageable. While in the process, we're going to stick to the principles of stability and safety as our core values. Looking into the year [ 2022 ], we are going to stick to the transfer to progress in a steady manner. At the same time, we are also going to reallocate the growth as well as the strategies for the general performance. We are also going to actively be part of the transformation in the industries accelerating the industrial development and creating a very stable environment for the shareholders. This is the China Re group outlook for the year 2022 and this is actually the general briefing of the China Re Group's performance in the year 2021, we want to thank the distinguished investors and analysts for the long time support.

Thank you very much, Chair Linjiang and Mr. Zhuang for your detailed introduction. Now the floor is going to be opened up for questions. So we are going to invite the executives to answer the questions from the investors and analysts.

[Operator Instructions]

I'm from the Bank of China, [indiscernible]. So I want to know that the digital China Re 2.0, what is the content of that? And also how do you use the technology to empower the business? Will you be innovative about the business model? And second one, on the health and old aged care business? Do you have any innovative technology? I want to talk about how you plan to do to have the integration of the strategy of the health sector.

I think these 2 questions, I will invite Zhuang Qianzhi to answer the question.

So I should say that the digitalization or digital transition of the reinsurance industry needs us to be adaptive to the new industries. And this is necessary for all the market players. So with the Internet of Things, Big Data, AI and other emerging technologies in the market and also regulatory requirements and better internal management, in the financial sector, insurance sectors, we need to adapt ourselves to the digitalization. So for China Re in 2018, the China Re has implemented the digital China Re 1.0, which has ushered in our digitalization. I shall say that in the past 3 years, China Re, the digitalization has made some achievement, for example, infrastructure and also the end part as well as the middle control platform. So currently, generally speaking, we have 85% of our business online, which is higher than the average of the insurance industry. So considering the future trend of digitization, based on our 14th 5-year plan, at the end of the last year or December last year, we have released the digital China Re 2.0. The Digital China Re 2.0 compared with 1.0 version I shall say will focus on interconnectivity online as well as the data and using the data as an asset to support our development. We shall also have the database Internet, the IoT and platforms based on the data. So the Digital China Re 2.0, the logic is that we want to attract the resources to build the platform and ecosystem. We want to have a data-driven business and integrating our internal and external data to achieve the value of the data. At the same time in this strategy, we also want to build the different scenarios, customer-oriented and the smart technology ecosystem based strategy. We have pictured the smart development, the external innovation and the blueprint for the future. So with digital infrastructure, institutional reform, the platform and the ecosystem we have made specific plans. In order to make our Digital China Re 2.0 strategy implemented, in 2021, we have set up the innovation incubation center of China Re. We optimize our institutional structure. And also, we want to integrate our business innovation. At the same time, if possible, in the future, we want to set the independent, the China Re digital technology company which will also help us to achieve our digital innovation targets. So that is what I want to talk about on a Digital China Re 2.0. So to be more specific, just like our Chairman mentioned, the catastrophe and earthquake model 3.5. It has been listed as the only model of the insurance industry in the 13th 5-year plan. We have also developed our catastrophe model 2.0. At the same time, we leveraged the blockchain and to create some platforms of compensation and claim. So no matter on the infrastructure or the models, I think we have done a lot of work last year. So that is the first question I would like to answer. Your second question is how do we integrate with the health and old age care industry, or nursing industry? I shall say that this is crucial for the upgrading consumption and industry of China. So no matter it's a primary insurance or reinsurance business, these are very important actually [Technical Difficulty] part of work. The first one is on the insurance part, no matter the P&C primary insurance or life reinsurance, our net insurance, we have expanded our business portfolio for the life reinsurance by leverage our advantage of personnel and data in the overall health and nursing industry, we have many innovative products. For example, the long-term care as well as other innovative products. On the investment side, the China Re asset has been invested into the nursing industry. We have also invested in the health care and nursing. So for example, in the strategy of our company, no matter is the life insurance primary business at edge. In the future, maybe we can by application or acquisition, we can set up some independent platform to be strategic support of the health and nursing industry. As for the health and the nurse industry, I would like to invite Tian Meipan to make some complementary remarks.

Okay. I think to be more specific on the implementation of the health care, I shall say that in the health care and the nursing industry, first of all, I just want to say that in the health, we work with the Medicare and integrate our business with Medicare, for example, during the reform that some special drug insurance and also we have -- in 2021, we have products related to the CAR-T, which is the latest medical equipment and technology. Besides, we also for example, that the insurance industry to benefit people, I think the previous bigger mentions. And also for the insurance products of the rehabilitation at the same time, we're working with the medical industry. For example, we work with some leading hospitals, for example, like the BRI hospitals. At the same time, and also that we work with the manufacturers of the cardiovascular pillar support. At the same time, in innovation, for example, for other specialties of the hospitals, we also explore the possible insurance. At the same time, we also work with Medicare in China. For example, back in our insurance to benefit everyone we work with the local bureau of medical. We have held in-depth discussion about how our commercial products can be combined in local Medicare, basic Medicare. So when talking about the industry integration and how this health sector can support our business portfolio of China Re, I shall say that they are complementary to each other. So for example, on the one hand, through the industry integration, we have accumulated a huge amount of data. By leveraging data, we can do the pricing strategy. And also, we can accurately design the premium and policies. Also through the industry integration, our primary insurance business can be supported by our products. Our products will meet the demand of the public better. For example, we have CAR-T and also some [ heart pump ] technology products as well as cardiovascular products. So for all these products, it can make our insurance products more attractive. Thirdly, by working with the other industries, the profitability model has been quite diversified. For example, we have innovated in the payment model and also by working with the industry, with hospitals, pharmaceutical manufacturers we can try to make our profitability model more diversified. So that is a simple answer to the business integrations with the health and the nursing industry.

[indiscernible] I have 2 questions. The first one is the P&C. The second one is the life and health. For the P&C, I can see that the international business has been going very well. I want to ask the reason behind it. Secondly, this year, we have seen there are some geopolitical factors or risks, especially some overseas business may be very volatile. Some airline companies, they have also suffered some loss. So for this year, what do you see about the global reinsurance market and the quality of the reinsurance? Second one is about the L&H. L&H last year has been slowing down, especially in that for the major disease. I think that if you look at about the L&H it has been quite good for the China Re. So I want to ask, can you give us some outlook about the domestic L&H market in China? How do you think about the future trend? And also for the medical insurance, life insurance, how much it can grow in the future, how large the market can be? And secondly, for some of the companies when they face pressure from primary insurance, how can you make sure that you can have a stable growth with the pressure on the primary insurance?

Okay. For the P&C internationalizing, now I would like to invite that Yuan Linjiang and also for the L&H Mr. Tian Meipan.

Thank you very much for asking about the P&C. So especially, I want to thank you for your attention to our international strategy of the P&C. So just like you just mentioned, in recent years, the international layout of P&C has been going on pretty well, especially in 2021. Our business has been growing quite rapidly, especially that the quality of the underwriting has also been improved. And the reason behind it, can be seen in threefold: The first one, we have seized the opportunities of a strong market and a higher premium; the second reason is that we have significantly optimized our business structure especially for the business that we have suffered from loss of the policies. We gave up the losing part. And also for the business, which is not very strong, we have optimized the underwriting conditions, so we have significantly improved the quality of our business; the third one is that we have a better risk management. For example, we have set up the risk management model and system. We have also taken many of the risk management approach. Through all these measures, our international business has improved significantly. At the same time, the quality has also been much better. So just like you have just [Technical Difficulty] and some very popular issues. One is the Russian-Ukraine conflict impact. Another one is about the recently that the sad event of the airline accidents of the Eastern China airlines. So I think that since the second world war, the Russia-Ukraine probably has been the biggest one which is impacting the international projects and economy. And also for the insurance industry, it is also changing the general picture of the insurance industry. For China Re Group in Russia and Ukraine our business sector, we don't have much business in Russia and Ukraine market, it is been the Chaucer market, which they have undertaking some of the critical violence insurance. The Chaucer has eliminated the critical risk and they have read out our policy claims, especially for many years in the scattered risk Chaucer has been prepared quite well. They have designed a very good redistribution mechanisms. And starting from the China Eastern Airlines accident, we have also quite concern about the event, we have initiated the emergency response mechanisms and we have both our growing channels for the claims. In the recent years, we have also trying to figure out the potential risk. And this time the air crash, we have undertaken the air aviation insurance, risk insurance and emergency influence. During the full underwriting process, we have provided some of the reinsurance services the share that we have taken is within the range of our responsibilities. You've been mentioning these 2 international and domestic hotspot issues after we discovered and after we have screened the norms, we find the total risk is within the range for us to control and it's not going to impact the yearly performance. The general risk is still a contributable manner. Thank you very much for your question. That is my answer to your question.

For the future development of the L&H market, we shall see the current situation. The L&H market is focused on the major disease. There is a total number of premiums, which is around RMB 700 billion to RMB 800 billion and it's also -- but the majority of them goes to the major disasters and also from the long-term nursing events. In the medical insurance, the focus of them in the major disease insurance. Major disease insurance in the year 2021 is occupying a very huge market share. Generally speaking, in the account of L&H market is focusing on the insurance sector and the majority of it goes to the major disease. The development of the major disease in the past few years, starting from the year 2018 through the year 2020 through the year 2021 it is widely growing, especially in the year 2021, we call it rapid downwards in the industry, why does it occurred? One of the major reason is because the major disease product what we used to call [indiscernible] product because it is one of the major contributors for the insurance company is making a major income results for our agents. It is also very defined real demand wise. But under this new environment, the replacement of the health products means a lot of product has such a result. Some of it has a more attractive needs in terms of it, the prices change while the total premium and the total area covered is very huge. It can also address the problems of some of the major disease, which can cover for several millions of RMBs moving into the future. The major disease with factors, the ratio is going to be slowing down while for the medical part, medical insurance, it is going to grow. And with this rapid development, there are several major reasons behind it. From the national policy perspective and secondly, because we are entering [ Internet ] aging society, while the people are aging, the disease is always accompanies. And the second part is that we still have a very high ratio of the self claim ratios. There is around RMB 7 trillion medical expense and for around 50% of them is being paid by the personnel. And fourthly, the client demand is now shifting. They are hoping that they could be registered in the half renewal and this is a different demand of the general public. This is for the future development. While moving into the future, our country is -- the insurance system is being still dominated by the medical insurance A lot of people is talking about the future explosions of the medical insurance. Will it be turned into a very huge market? We should be quite clear that the market is being still being dominated by the medical insurance. The commericial insurance is a major compensate or major supplement to that. We have a lot of potential, but the risk is also very high. Looking across the world, the healthy development, the L&H product do suffer from a lot of difficulties. Definitely in the Chinese market we have our own challenges, and we have our own features. One of the major features for the Chinese market is that we have a huge population. If we've just taken 1% of the total population in China, that is around 40 million people, it is equivalent to the total population in 1 country in Europe. We do see the potential demand moving into the future. But in terms of the L&H product, what is going to be our future exploration? We are going to focus on the following front: The first one is that from the data, because we have been focusing on the reinsurance, we are a major [ taker for ] risk. The first line is that we are going to price the risk, so it is going to be digital first. Second, from the product perspective as one of the major [ banks ] to achieve the perfect. Through the perfect, we're going to improve the further into the market have the further development of the insurance companies, especially a lot of insurance companies, they have shifted their product into the annuity product. We are going to help with the development of the annuity product in the insurance companies. We are also going to integrate the industry. We've been talking about the relations for these sectors. There are so many works need to be -- so much work needs [Technical Difficulty]. Next steps. Moving to the next steps, we are going to focus on the infrastructure development in the industry. Currently, the commercial insurance company have a lot of experience, but we are liking good operation. We have a lot of good products, but we are still lacking a very good operation. The infrastructure development in the industry is also very important and moving into the next steps whereas one of the reinsurance company represent in our country as one of the major players in the reinsurance market across the world, we are going to shoulder the responsibility and work together with other companies. We are going to build very good infrastructure for our industries. For example, the insurance data -- for example, the compensation in solvency ratios, clinical disease management and through this management, the commercial insurance is going to be deeply infused with the medical products, this is our real contribution to the Healthy China 2030 national plan.

Thank you very much, Mr. Tian and Mr. Zhuang for your kind answer. We are going to invite the next investor or next analyst to come into the floor.

[indiscernible] So our question is about what is the result of the [indiscernible] in China Re Group's effort in selling the national green and low carbon strategy?

China Re Group as one of the major players the insurance sectors across our country, we have been focusing on the national strategies, including about nation as on the grain and low-carbon development. We made a lot of efforts. So you mean that what we have achieved in adopted initiation. So for many years, we've been Belt and Road with the initiations for the Belt and Road conflicts in Singapore, in London and in Beijing, we list 3 points. We have set up some of the general corporations. And for these 3 parts of the efforts, it is carrying for 200 countries and regions across the world. Giving very good foundations for the Belt and Road initiation. Second question, our Chairman has mentioned that some of the journalists or some of the analyst has a or the latest development of our international business. So we should talk about the Chaucer. Chaucer is a very important platforms under these floor. They have a very important players in the physical violence insurance and political surety products. And these are some the Chinese insurance company lack in the market. By acquiring Chaucer, the China Re Group has supported the Belt and Road initiation. For example, China Re Group has formed the Belt and Road Initiation Consortium. And last year, we have operated for the first time, which is providing for around 190 products, this is actually a numbered perspective. And for other different perspectives, we have in Myanmar and in [indiscernible] and in the South America, we have provided us insurance support. And in terms of the efforts in the growing low environmental protection, we've been working in this area and we've been innovating in this area. Last year, we have formed China Re insurance with certain institutions. Other areas, we have recruited the experts in the industry to intensify our efforts in the lower carbon and growing development to play roles as in the industry. For example, in the low carbon sectors, we have collaborated with the nuclear power generators and nuclear power plants to guarantee that all the nuclear powered units needs to be insured. We have facilitated the insurance of the frontline workers in the nuclear power plant. We have also worked together with the transformation of the new energy sectors. We provided a lot risk guarantees for the offshore wind power products. These are from the effort that we have done in the lower carbon and green environmental friendly sector at the same time in the recent years. In the lower carbon sector, we were trying to lower down risks. And in the [indiscernible] we have also formed up a special research team. And in our group, we have granted some of the barges. Staring with the operating insurance, the [indiscernible] insurance, these are some of the new sectors, which accords the same as the green and low-carbon development. This is going to pave the comprehensive foundation for the future development of the China Re Group. China Re Group as one of the major forces in the reference sector, no matter in the Belt and Road initiative, we have [indiscernible] played a role as the Belt and Road initiative, and we are working at the forefront of these areas. And we have also innovated in this area. Let me supplement my answers. Here, no matter for the Belt and Road initiation for the green and low-carbon development, the total insurance demand is not very huge, but is very important [indiscernible] market with a rapid growth ratio. Our acquisition of Chaucer, for example, Belt and Road initiation, 90% of our business is being provided by the foreign insurance company. In the past, we didn't have this capacity, especially in pricing. But now we have more weight, especially that with the Belt and the Road that the communities we want to leverage the whole industry to minimize the risk. So that's why last year, although the amount was not -- absolutely not was not huge, but the growth rate was more than 100%. So we want to leverage the advantage of Chaucer. So we can jointly develop some products to help and facilitate the Chinese companies to go global. As for the green and low carbon strategy like we said, we have set up the China Re Institute. So in the reinsurance industry and product innovation, we want to play the leading role in research. But of course, that we know that it's a long way to go in the future. But as that the -- representing that the reinsurance industry of China, we definitely need to invest and also to take the strategic lead. So in the future, we can try to make it into our comparative advantage, and we need to make a lot of efforts. For the China Re, we have ability and advantage of that. We have 70 years of history as a famous brand. And also, we have a huge talent pool of the reinsurance industry. So for the past 7 decades, we also have a lot of historic data in our database. So doing the digitalization, definitely, we want to leverage, fully leverage all these data. And this needs some long-term planning work. So thank you very much. So next question.

First of all, I want to congratulate on the China Re. And also, you have made a good performance with the pressure of the market. I have 2 questions. The one is the insolvency and also that whether that the solvency capacity will be impacted? And also that because the regulatory requirement has also given some transitional period. And secondly, it's about the -- for the agriculture insurance. And also in the future, that what will be the risk premium? And what's your planning? And also for the commercial agricultural insurance products, what is the potential of that?

So thank you very much. First of all, I will invite that Mr. Zhuang to answer the questions. The second one, I will ask with my colleagues.

So thank you very much for your first question of the C-ROSS. The C-ROSS, China Re risk-oriented solvency system. C-ROSS by the end of the last year, the CBIRC has issued the C-ROSS requirement. We have done a careful study after C-ROSS. So of course, we have learned about that. But generally speaking, I think the rules of the C-ROSS is a requirement. They require the insurance industry to focus our main business. And the C-ROSS is focusing on the capital adequacy and also for the bottom of capital to be very clear and see through. The insurance industry need to serve the real economy. So all these are general direction. As for the C-ROSS and impact to our business, we have also done some careful assessment and estimation. So the drop of the business is acceptable by us. So generally speaking, I think that the C-ROSS role for the China Re, the impact is modest relatively positive. And also, we think that for the reinsurance, the impact is less than the impact on the primary insurance. The C-ROSS rules actually focus on the risk see-through standardization and also the regulations. So it's more about the long-term strategy of the company to lead the insurance and the reinsurance companies to focus more on the management, capacity and operation. So this is consistent with the long-term strategy of the China Re Group. I shall say that we are on the same page with the C-ROSS. And also in the long run, it is positive. And for the question you asked about the C-ROSS, the transitional period. Actually, we have been talking to the CBIRC [ Mr. Joe ], our Vice President, has led a team to visit CBIRC. And also, our current strategy has also been approved by the CBIRC transition. We want to fully leverage a 3-year transitional period to improve our technology, management and capacity so we can better cope with the future challenges after the C-ROSS. Thank you very much.

Okay. For the agricultural product, I think I will try to answer that. First of all, that for the China Re, this agricultural business part has been running for over 1 year. We have optimized the overall risk models of the agricultural products. For China Re as a bigger shareholder of the China Agriculture, I shall say that from the day one, we have actively engaged into the operation and the risk management of the China Agri Re. We have also engaged into the business risk assessment and mitigation. In the past year, we have been working very well with China Agri Re. So these 2 companies have all obtained the stable growth of the business. So after the China Agri Re have established for the -- for our business, we no longer take the business of the agricultural community. For the agricultural business, we have expanded our future strategy. For example, on the one hand, we have set up the agricultural and rural service department. So we work with the agricultural commercial products. On the other hand, through these departments, we also want to do some agriculture-related business. So in the past year, our overall operation has been quite stable and also quite smooth. The growth rate of the business has been 3%. In the overall agricultural insurance sector, I shall say that China Re has much advantages. On the one hand, we have our historic legacies. From 2014, we have been developing the China agricultural insurance and also for the agricultural community, we have also been engaging in the management. So we have the talent, we have technology, we also have a lot of data of agricultural insurance. For the future, definitely, it would lay a solid foundation. In the future, in the commercialization, we are very confident about that. So when talking about the China agricultural commercial insurance, I think that in the future, no matter it's agricultural insurance or agricultural reinsurance, definitely, there is a huge potential and room in China. Firstly, China is a country, a big power of agriculture. And also, there is a huge market, so agriculture needs to be supported by insurance and reinsurance product. So that's why the potential is quite huge. Secondly, I think the Chinese government has to require to provide a more diversified product and high-quality service to the agricultural products. So agriculture will also gradually to support the value and price of the product. So there is also a huge potential. And also for the agricultural insurance industry. That's why the products have been well welcomed in the market. And the third one is the risk mitigation model. I think for the agricultural reinsurance industry, we need to mitigate the risk. In recent years, there are a lot of disasters and catastrophes in China, especially the farming and agriculture has been hugely impacted. So the demand for the insurance as well as the demand from insurer to the reinsurer as been growing much than ever. So the matter is the commercial agricultural insurance or commercial agricultural reinsurance products, I think there is a huge potent, and also, we would like to work with the whole industry to contribute to the agricultural sector in China. Thank you very much.

[indiscernible] We have noticed that for China Re in your annual conference, you mentioned the 14 -- or 145 strategy. So what is the pivot of the 145 strategy? What are the leverages you have for the 145 strategy?

Okay, I will try to answer the question. The 145 strategy I have covered a little, I think I can elaborate from several parts. The first one, 145 strategy aims to be stable and growing to further raise the value of the company stable means we need to stabilize our market-leading position, market share and also the fundamentals growing means we need to find the incremental business to be innovative and explore the new business opportunities and value proposition means we want to make us more competitive in the market, more sustainable and more organic. At the same time, we also need to deal with the balance between the business, client and environment or society because we represent the state-owned enterprise, we are also a listed company to create value for our shareholders. During the 13th 5-year plan of China, you know that in the past, in the reinsurance especially, we were the only one. We have 100% market share. And then after joining the WTO of China, now domestically and internationally, onshore and offshore, 500 reinsurance companies have entered into the Chinese market. But -- so as our share, of course, has been eroded and dropped. And for example, for the P&C reinsurance, now we account for about 1/4 in China. So we try to stabilize our market share with a slight increase of the share. While, for the L&H, for the life reinsurance, we still maintain more than 50% of the market share. So that's why we say now in the 14th 5-year plan, we want to focus more on the value co-competitiveness of the company. The second leverage we have or pivot is that we try to focus on our main business because that is where we started our business and how we shall live in the world because we are called the China Reinsurance business. So of course, reinsurance is our middle name. And also, we want to benchmark ourselves with international competitors, their international standards and practice. At the same time, we also -- we have our primary insurance, asset management, the digital technology as well as the insurance agency or broker business. So we try to improve our competitiveness in the market. But of course, that we also have other line business, for example, to create a better ecosystem. The third pivot we have for the 145 is to be innovative and profitable. So just like I said, the reinsurance business around the world and the leading players of the innovation. So that's why for China Re it is the same. We try to be continuously innovating our product and service. We are going to [Technical Difficulty] and continue to build R&D system for the quarter as well as the product factory. That's the reason why we came up with the insurance -- the reinsurance products. That is to think we are going to provide a one station service for our clients. And the fourth point is that we are going to have a strong headquarters because currently, we are facing such unprecedented changes domestically and abroad. The impact or the effect our strong headquarter is gradually demonstrating. We have quoted about it for the strong. So what does it mean very strong? We have 3 strongs, strong leadership, strong gardening effect and strong control. We are going to build a strong management system as well as the sell systems, which can help us during the 45-year period.

The next question is coming from Citigroup, Michelle.

I'm the analyst from Citigroup. I have 2 questions. The first one is about the [indiscernible] product. We are seeing that China Re Group is actively participating in this further across the country. So our question is what is the role for China Re Group and the process? And what are the demand for reinsurance in this sector? We understand the premium for [indiscernible] is relatively low. Well, can you tell us the perfect model of this product? We understand that there is a potential risk for the reverse point. So can you tell us more about it? The second question is about China Continental. It is about the auto insurance. There is a risk reform in the auto sector, the C-ROSS reform this year is marked is the C-ROSS reform still impacting the business of the China Continental Insurance? The average cost ratio is still quite high. What kind of measures did the company adopt improve the [indiscernible]? And in the year 2022, for the comprehensive solvency ratio, do you have any target? So these are the 2 questions.

Thank you very much for your question. So the first question is going to be given to Mr. Zhang Renjiang, the General Manager of the China Re P&C. And the second question is going to be given to Mr. Li Wei, the General Manager of China Continental.

So the development of the [indiscernible] starting from its first day in the year 2019, 2020 and 2021, it is developing from a huge [indiscernible] medical insurance directors. We have been facing a booming with special pharmaceutical product. It used to be a product in the health sector, but currently, it is a product developed quite rapidly the China Re L&H is actively participating in the [indiscernible] insurance. We have been working in one of the [indiscernible] insurance companies in the [ Gyeongsang ] province trying to do some of the pilot projects. We have introduced this product in a very informal way. And starting from the performance in the year 2020, in 97 cities, we provide this solutions, and we generated over 50 different cooperation products. And the total number is reaching for around 500 million products. As our [Technical Difficulty] has reported so what kind of rules are we playing in the process? The first one is that the insurance company is -- the rule of the reinsurance companies to undertake the risk. Secondly, in terms of product design, we are working together with the medical insurance bureau together with other different products. So the surety plans and the waste from the pharmaceutical products. And thirdly, we have some of the data support. We have the pricing support. We have also provided some of the risk control measures. And fourthly, we have also provided some of the operational support. While working with certain suppliers, they are providing the services to the suppliers. Dynamically, we have monitoring the recent development of the premium product. For example, the medicines based and also the [ adhering ] range, which is going to enable the [indiscernible] benefit the general public for the demand to reinsurance. And the demand is very booming because of the following reasons: The first one is that [indiscernible] is something quite new, providing us new scenarios. It is a core that is ever changing. That's the reason why people bring their opportunities. People are fascinated by the concept. So there are a huge demand from the market. The second one is there are some of the risks. We are seeing that we have mentioned about that there are potential risks do existed alongside the process. And the third one is that some of the insurance companies, while they are designing this product, they are liking certain data, and it is one of the major challenges. And the fourth part is that, for this products it's not only needs the help from the pricing, it needs the innovations in terms of the business. If it is a very simple business model, it is not going to satisfy the demand for this products. The insurance company is still working at the first gate that what we call it is [ lacking ] innovation in the business model. So are there any potential risk? And how are we going to avoid the potential risk? To be frankly, one of the major functions of [indiscernible] is called the health registration problems the young people help donate to the elderly people and the health people actually help with the disabled people. So in the undertaking process of the [indiscernible], we have been focusing on several fronts. The first one is that the total -- we are going to estimate it in the total investment ratios, if we find the total investment ratio can reach at a certain level, we are going to be actively a part of this process through the operational process, we are going to see this. And second, for the data and in the data process, we see advantages of the data. We are predicting the data and for the insurance plan, it is also very important. We see some of the insurance plans. There is a very high number for the undertaking ratios. So people are clear about the [indiscernible] some of the people are curious about the claim ratios and [indiscernible] numbers. They can came up with a roughly number, for example, from the [indiscernible] in Shanghai, the compensation ratio, the loss ratio is quite high. We have estimated such scenario because we understand the self payment product is quite high. So while we are doing this product, we find it's quite difficult. The data itself explains. Although it is demonstrating some of the experiences, but the data can explain something. So that's the reason why while we are doing auto function, we are trying to come with the data. That's the reason why from the commercial insurance point of view, this is going to be very helpful with the sustainable development of the [indiscernible] product. It's not going to turn the [indiscernible] product into something of a waste. The [indiscernible] is going to increase the efficiencies in the medical system. We are not going to ensure everything and create some of the abilities in the system. The first one is that we need to design the product facing the market. The second one is that we are going to increase the efficiency. So Mr. Wei from China Re Continental Group, can you answer the second question?

Thank you very much for your question. I'm going to answer your questions through 4 fronts. The first one is that for the C-ROSS reform, C-ROSS reform in the past 9 years has been affecting the whole industry. Generally speaking, it is producing a continuous impact on the perfect profitabilities of our industry. For the long term, we are facing the new pressure from the premium and also the cost. From long-term perspective, it is remaining quite positive for the transformation of the insurance industry. After, we have increased the numbers of the steel sector for China Continental, the total cost of the auto insurance means that we need to adopt the following measures. For the first, we have figured the cost for our auto insurance. Secondly, we manage the sales fleet to a very digital system. We have also controlled the performance evaluation system for the sales, and we have also optimized the systems. Lowered down the loss claim ratio. And fourthly, we have controlled the total cost [indiscernible] the total cost with the business development. By the end of last year, the comprehensive ratio has been dropped by 8%, generating a lot of result. The question I think you ask but my third part of the answer is how to improve the qualities after the C-ROSS reform. In this matter, China Continental Reinsurance have intensified our effort in the non-auto sector, we have intensified our efforts in the auto insurance by using and adopting a high level of client pitching and adequacy ratios of the clients and improvement of the client's loyalty, which is going to enhance our abilities to deal with the risk. From the underwriting perspective, by now by the end of February, the underwriting capacity has been reaching for around 10%. This is the general indications of the high-quality undertaking. You have also mentioned in the comprehensive solvency ratio this year, we have done lot efforts. That is answer to the second question. And the fourth question, you mentioned about the annual target for the comprehensive solvency ratio in the year 2022, we are going to accelerate the effort and upgrade our structure, especially by eliminating the C-ROSS reform, we are profiting a [indiscernible] growth, improve the qualities of the auto insurance, bringing the project for the shareholders and a healthy development for the company. Thank you.

Thank you very much Mr. Li. So due to the interest of time, I think that for the Michelle's question, I think I also can make a few remarks. I think for the company, this is our core business. It is a P&C, primary insurance company. And also as the question you asked about related to the auto insurance reform, I think you can see that from September last year, actually, for the P&C primary insurance business, the impact was huge because in the past, the whole industry relied on a single product. And also, like we just mentioned for continent as well as other companies in the market have been actively adjusted ourselves, for example, lower the cost, control the fee and cost. It has been remarkable. In the future, we will continue to reform. But generally speaking, I think that the result will be gradually reviewed because it was only for September last year. And also from continent as the P&C primary insurance company, we want to place ourselves against the whole industry. For the insurance industry, in short term, we are still at the bottom, for example, life insurances and also life insurance very well. For the P&C Insurance, it is also in the middle of the transition and adjustment. The whole industry has been reforming. So in the short run, like the auto industry, it is maybe we need to change our operational strategy, avenues controlling our cost management and mitigate the risk. But in the long run, I shall say that we need to get rid of the simple and extensive business model. We couldn't over rely on single product for the whole market. So that's why we need to do 2 things. The first one, on the product level, we need to be innovator and diversify. So for example, some emerging lines health, liability insurance [indiscernible] et cetera. So by diversifying the products, we can minimize our overreliance of auto insurance. On the management level, we need to best utilize our management, reproduces, redesign our whole value chain and business process to improve the overall efficiency. So that's why if we place the continent against the whole industry during this transition, I shall say, we to innovate our product, we also need to optimize our business and focus on the compliance that we can survive from this transitional period. Generally speaking, in the long run, on the one hand, we think that for the issuance industry, especially the P&C primary insurance, it is quite -- it has great potential in China. And this trend of insurance industry will also continue. The transition is only temporary. And no matter is in terms of the Chinese market or the whole industrial continent. We are very confident. Thank you very much.

Okay. Thank you very much Mr. Zhuang and due to the interest of time, I think maybe that is the last question. The last question is from the [indiscernible].

[indiscernible] So my question is on the asset on investment, for the China Re investment has been stable. But this year, the investment is very complicated with a lot of the market volatility. So what is your strategy for investment this year?

Okay. I think I will give floor back to Li Wei, our asset management company, General Manager.

Okay. Thank you very much for your questions. I shall say that in 2022, that market has a huge volatility. And also against this background for the China Re asset management company, allocating our asset, we have been upgrading our strategy. We try to focus more on the investment resource strategy. We have accumulated some very mature asset allocation strategy. I shall say that in allocating assets and investments, we will continue to use allocation to drive the investment strategy. And also, we want to have a match of the maturity of the funding. To be more specific, we're allocating the investment, and after the pandemic, we will keep a close eye on the long-term trend and the short-term market behavior as well as also the balance between the policy and the market response. In order to diversify our asset, market and strategy as well as the combined management experience, we can obtain the long-term stable growth. On the fixed investment and fixed return, we want to flexibly use multiple [indiscernible]. So for example, we try to allocate more investment into the public fund rates, which can provide a solid support. In the secondary market, we want to diversify the portfolio. And also on the risk management, for the fundamentals, we try to find the structural opportunities in the market, we will be patient and also balance the risk return on investment in the short run that we will control that our position to a balanced situation. At the same time, when optimizing and selecting the target for investment, we will also allocate some resources for the long-term investment, in terms of the evaluation, you can see that the value can be reviewed, we will also share the benefit from the rapid grower in the market. On the other hand, we will use the funds direct investment to have a project pool. So based on the inventory of the products, also want to connect to the insurance industry. Overseas market, we will also work with domestic research on the equity research to optimize our capacities, especially that to have a better control of the market capacity. Thank you very much.

So due to the interest of time, the 2021 annual report to release, we will stop here. I want to thank for all the investors, analysts and media for your great support. [Statements in English on this transcript were spoken by an interpreter present on the live call.]