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

Good afternoon. Welcome to attend China Reinsurance Group 2023 Q3 result conference meeting, I am the moderator for today's session [indiscernible]. So those are the guests who are attending to this maintaining are Mr. [indiscernible] Vice President of China Reinsurance Group; and Mr. [indiscernible], the Vice President of China Re TMC and also the general [indiscernible] China [indiscernible] vice president of China Continental Insurance, Mr. Lu Xiaowei. So in today's meeting you're going to be divided into 2 parts. The first half is that we are [indiscernible] Group performance in the third quarter of the year 2023. The second part of it is to maintains Q&A session, we are going to have the Q&A session. So if you have any questions, we are going to open up the floor on the Q&A session. So now we are going to give the floor to the [indiscernible].

Dear investor, dear analysts [indiscernible]. Now I'm going to give you a brief introduction towards China [indiscernible] group performance in the first 3 quarters of the year 2023. The figures is on a year-on-year basis. And the companies without announcement is going to be focusing on the different business sectors and the international standards. The business sectors have certain [indiscernible]. The insurance income and the net profit of the group in the first 3 quarters is TWD 1440 million and RMB 2,790 million, respectively. The net profit is around 10%. We have [indiscernible] opportunity from the overseas markets, the underlining surface of AMC has registered a value record group. PMC [indiscernible] not including the Singapore [indiscernible] has registered RMB 1043 million. That is a 12% growth. The general net income has been ongoing quite drastically, while the underwriting profit also rising quite increase rate. The domestic earnings has been growing by around 6%. The four businesses while driving the rapid opportunities of the increasing of the profit as well as expanding our edges in the area. The total underwriting interest income has been rising by about 20%. In terms of the underwriting profit, for the first 3 quarters of this year, the [indiscernible] solvency adequacy ratio has been improved quite dramatically. And we are also optimizing the business structure domestically and internationally while dealing with the unprecedented [indiscernible] has been increasing at record rate, China Re Lloyd, in the first quarter of the year 2023 as the all-time [indiscernible] September 30, 2023, the core capital is registered at RMB 35 million, RMB 590 [indiscernible] while the available capital is RMB 45 million and 3,000, China Continental interest has the full capital at [indiscernible] there would be RMB 8,000 and for short-term surety products, we have seen a very rapid growth. The underwriting surface is better than the performance compared with last year, with the rapid growth of the first half of this year, according to the changing situation in the third quarter, we have also conferred the number in sector. Canary continental insurers have seen a total revenues of approximately the first 3 of the total insurance income is around RMB 39 million, 1,25,000, while the net profit is 441,000, the basic earnings per share is 0.029. Based on the features of the reinsurance sector, the general business is also progressing graphically. Thank you very much for your time concern about the group. Thank you, Mr. [indiscernible] now the floor is open up for questions.

For the interest of time, we limit the questions within 2, and please identify the authority information you made before the questions. Now we are going to [indiscernible] the first investors. Thank you.[Operator Instructions].

I have 2 questions from my side. The first question is that we are seeing a very [indiscernible] capital markets in the third quarter. What is going to be the impact towards the performance of the company? And second question, we have seen a reinsurance group in the net profit in the first 3 quarters of the year 2023. What is the reason behind it? Thank you.

Thank you so much for your kind questions. The first one question is about the investment in return. We are going to give the floor to Mr. Li. And the second question is about the general [indiscernible] group. We're going to give the floor to the Vice President. Let me take the first question. About the fluctuating and upfront in the capital markets, currently the world's critical and economic situations and working on uneven cost. This is also causing a lot more pressures in the domestic market as well as the customer market in China. From our perspective. we have a very optimistic perspective about all the Chinese economies and its outlook. We believe the general performance of the Chinese economy and the future is not going to be trained. We still have a very huge room for further development. We are confident about the future of the Chinese economy. In the long term, we are going to have a very optimistic perspective about the fixed income come assets. And the national [indiscernible], we are going to find our own development strategies and [indiscernible] benefit of reform and open up fairly this year marks the very important year with [indiscernible]. We are going to optimize the LP LE and then generalize the fluctuations in the capital markets. We are going to adopt multiple strategies in terms of the investment portfolio and we are going to put the dividend into the secondary investment portfolio and finally, optimizing investment portfolio. Fourthly, we are going to continue to strengthen the scientific investment in research and systems in order to promote the research in the market and improve the investors' portfolios. That is my answer to your questions. Thank you.

I'm going to answer the second question. From the beginning of this year, we are trying to optimize our capital market while trying from these group's strategic sorting perspectives, we are acquiring all of our business to be stating growth and the merit of stabilization. Based on the stated strategies guiding third year 2023, the general growth and the investment returns starting our expectation. According to the data reflecting the performance of the first 3 quarters of the first half of this year, the net profit and underwriting profit in that of the [indiscernible] moving to the future, we do keep momentum while working on the trends in order to optimizing the stages of the management measures. So the general plan is within our control, especially in terms of the improvement in our underwriting profitability, I see a lot of improvement. Thank you. Now we are going to give the floor to the second matter.

The next question goes to [indiscernible]. Thank you.

Thank you so much for giving me the opportunities. I have 2 questions. The first question is asking the performance and also having range for [indiscernible] in China, so my question is to [indiscernible] generating CMC and China Continental Reinsurance that this network [indiscernible] of profitable related issues. And the fourth, the regulatory bodies, recently, it has published a requirement for the optimization about the insurance industry. For the development of the [indiscernible] -related business, for my question is that, are there any further changes in terms of used strategies.

Thank you so much for your kind introduction. We are going to give the call to Mr. Li. The second question is about the impact of the regulatory bodies. So we are going to give the floor to Mr. Li, the China [indiscernible].

Let me answer the first question, I am the China [indiscernible] actually, starting from the July this year, the heavy rain and the fluff heavy rain is writing habits across the north part of China. This is beyond our expectation, but according to the deals that we haven't received so far. The total compensation ratio is around RMB 170 million, while the majority of which is concentrated on the property-related compensations and combined. The [indiscernible] happened in June this year. does not have a market impact towards the China Re's sales performance. We are going to update the relevant information in the market and analyzing the underwriting profit information to the market and publish the relevant information to the market. Let me give you a brief introduction towards the insurance business of the China rate continental. Thank you so much for your kind information. After the flat network [indiscernible] China Continental Insurance has stepped up their 40 products in terms of the heavy rains that the total top line ratio is around RMB 86 million and the total target to [indiscernible] in the Titan does not create a lot of damage to the performance of the financial liquidity of the company. We are going to have the stable [indiscernible] to resume their normal duties after this offer. So thank you so much, Mr. Li. And the second question is about the regulatory new standards impact towards China Group. And you answer the second question, the state administration of market regulation recently published a new centers about the insurance structure about the national efforts.

The prime priorities are retested. These holding [indiscernible] requirement through the optimization of the structure. We are going to start spot the asset requirement at the same time through the [indiscernible] side line about the insurance-related assets, it is going to better serve the real economy and industrial factors supporting the overall development of the Chinese economy. And by combining with a digital world, the [indiscernible] work as well as the insurance work, we are going to reduce the pressure on the market and reducing the potential for the risk indicators improving the [indiscernible] efficiencies of the assets driving the potential opportunities while better serving the people and the market.

Now we are going to give the floor to the next investor, please.

Since the beginning about the listings of the market, China regroup is [indiscernible] has to keep a long focusing about disclosing of the information to the market. Today, we have summarized some of the questions, which is our great conference from the market, we are going to have a communication with the investors and analysts. The first part of the questions is about the [indiscernible] first.

Recently, we have published a disaster-related system for our international business sectors. And we are trying to estimate the overall business influence toward the [indiscernible] sectors. And recently, the conflict between [indiscernible] and Israel is also affecting the performance of China ReGroup. We are going to give the 4Q, Mr. Li from China Re-P&C to give us the brief introduction. According to the information we are having at [indiscernible], according to the information in the year 2023, the total sales from the area is around RMB 25,000 million. This is right by offer the Turkish earthquake and the heavy floods in New Zealand. These impacts are limited. It is within the control of the high-risk categories in the capital markets. But we have also observed on the third quarter of the year 2023, the typhoons created by the Atlantic ocean and some of the downstream structure changes. The risk is within our control. Second, it is about the impact of the Palestinian Israel conflict. And since the beginning of the conflict, we have kept our close eye about the conference, and we are trying to summarize in our 14 products. All of our business [indiscernible] with Israel covers the world related risk and the political risk analyzing team from Trover has reported all the relevant [indiscernible], we are going to opt the information through the official channel. Please keep a close eye about the information disclosure from Canary Group. I think this conflict has a very limited impact about the performance in our company. We have also summarized the performance in the China [indiscernible] according with the risk in the market facing the losses about the interest-related discrepancies. There are some other concerns about the performance of China Re life. Another part of the concern is truly related to project. Now we are going to get the floor to our colleagues with China Re life to give us a brief introduction. Let me give you a brief introduction of net profit and loss. This is going to be related to the future underwriting profit of our company, our business structure is quite differentiated compared with the insurance companies. I think the interest gap can be match able to the durability related to projects. The insurance interest-related deposit business sector is only of occupying from rather small proportion of the total business portfolio and our core structures only around 5%. So that is to say we are under a very small risk exposures. Moving to the future, we are going to exhort the environment return portfolio while accelerating the driving of the opportunities from the capital market, we are going to adopt a very conservative additives from the market and stay to the [indiscernible] matching strategy. The second part of our strategy is that in terms of the investment in return management, we are going to work on the research from the investment and come off with a multiport investment strategy pursuing for the stability of the returns in the investment and improving our management capacity. That is my answer to the first question.

The second question's answer is that we are going to be working on the risk policy. We are going to work on the clinical disease-related research. For example, we have put up, we have come up with the product elated to the [indiscernible] disease of the children. Second, we are going to have the insurance company to working on the health indicators to promoting in the sectors. And the thirdly, by coordinating with these sectors, we are going to come up with a [indiscernible] policy to better promote the product in the market, while enhancing the capability, the adaptation of the changes of the market environment is going to be a long-term proceed of the China Re Group. While matching the different portfolios and stabilizing the performance in the market, it is going to be the long-term proceeds of our group. So I have for the P&C insurance related projects, the major concern came from the 2 parts. The first part is [indiscernible] market cares about the deposit for detractive measures, and this is action to be very important for us to have an overall [indiscernible] of the underwriting profitability. Second part is about the supporting policies of the new energy-related vehicles. So we are going to give the floor to Mr. Li Xiaomin to give us the briefing in this areas. For the underlying profitability in the first 3 quarters of the year 2023, we are going to stabilize and have a dynamic control in this sector.

We can see that it has about a distinct [indiscernible] year-on-year. Moving to the future, we are going to have a better understanding about the performance in the capital market slowing the focusing on the infrastructure construction in the sector and supporting the development of the industry and full sale automation. Second question is about the long-term development. We have mentioned that we have a role in RMB 1.2 billion in the [indiscernible] changes about the energy sectors and the overall national target for the dual carbon related areas. We are going to invest in this area to demonstrate the skill base effect. We are still facing a [indiscernible] in terms of the overall performance, and we are going to further reducing the cost of the [indiscernible] project. This year, I believe the automobile market is entered into the mature phase. Any way it is going to become the dominant force in the automobile sector in China, thank you.

Thank you, Mr. Li, for your kind answer. In the asset management sector, the market is having a very close eye about the performance in the capital market. Let me give you a brief introduction towards the insurance-related products. There are several different features in the insurance-related sector. The focus is about driving the [indiscernible] and are monitoring the market with a profile and the asset allocation sectors, we are going to adopt a multilevel marketing portfolios while enhancing the investment capacity [indiscernible] simply in terms of investment from the Chinese market, there is a downward trend in the overall interest. We are going to stabilizing this downward trend and driving the better opportunities for further asset allocation and promoting the openings of the environment, stabilizing the performance and trying to make sure create an environment where the investors can be assured while enhancing the performance in these sectors, we are still having a very optimistic outlook into the future of the capital markets. We are in the period where we are going to enjoy the dividend of the record growth of the Chinese economy and enhancing our performance in these sectors and we are also going to adapt the long-term mindset to the capital market. That is my answer to the question. Thank you, Mr. Wang, for your time introduction.

For the interest of time, we are going to give the floor to the final investor, thank you. The final question comes from Isabel with Maison Securities.

I also have 2 questions. The revenue for the recently issued notice about better management towards the bank and the [indiscernible] what is going to be the impact towards the China Re Life and China Re P&C. Thank you so much for your question. The impacts towards China Re Life is going to be directed to Mr. Li and after the impact towards China fundamental is going to be directed to the vice president of China Re Continental. Recently, we have seen the notice about the better management for the banks on their contracts and the insurance related projects. From the long term, it is going to be better for us and for the government to regulate the market in recent few years, the insurance business and insurance products have been a [indiscernible] group in the banking sector [indiscernible] the business in China Re Life does not have a very direct impact under it. But for the transition of this state, it means that we should have a pointed performance. This means they should promote the high-quality development of the China Group. Thank you, Mr. [indiscernible] for the kind answer. For the impact about the performance in the China Re Continental, let me answer the question. The National Bureau of our financial regulations recently issued [indiscernible] and please note it means that we are going to gradually shifting to the competitive pricing mechanism, resulting in a lower underwriting price. In a short term, this is going to creating the competitive pricing market, while in the long term, this is going to be very helpful under long term development of the capital market.

We are going to use these opportunities to improve the pricing mechanisms and further all result in various meeting the most, thank you, Mr. Li, for the kind answer. For the interest of time, we are going to wrap up the results announcement for the first quarter of China Re Group in the year 2023. Thank you for your long-term support to China Re Group. If you need further [indiscernible], please contact China Re Group for further information and our RR team for further information. Thank you all.