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

Distinguished investors, analysts, media friends, good morning. Thanks for attending 2024 annual result announcement of China Reinsurance Corporation. I'm the host, Liu Yuanzhang, Assistant President and Board Secretary of the company. I would like to introduce the members of our senior management. They are Mr. Zhuang Qianzhi, President of China Re; Mr. Tian Meipan, Assistant President, Chief Actuary and CFO; Mr. Wang Zhongyao, General Manager of China Re; Mr. Li Xiaomin, President of China Continent Insurance; Mr. Zhai Qingfeng, General Manager of China Re Asset. The results announcement will have 2 parts. Firstly, our senior management will present to you the performance in 2024. Mr. Zhuang Qianzhi will provide you [ an overview ] of the performance and the outlook. Mr. Wang Zhongyao, Tian Meipan, Li Xiaomin will cover the performance of each business segment. Secondly, we will have a Q&A session. The management will address your questions and engage in an interactive discussion with you. Now let's pass the floor to Mr. Zhuang Qianzhi.

Distinguished investors, analysts, media friends, good morning. Welcome to 2024 annual results announcement of China Reinsurance [ Group Limited ]. In 2024, we faced very complicated external situations, but we are committed to be the world-leading insurance company. We are committed to the steady and progressive development and create the values. And we are speeding up the reform. Therefore, the overall performance tends to be very positive; and the competitive edge and the global influence have been increased. The high-quality development generated very good results. I'm going to cover the overall operation and the major achievements. I hope you can have an idea of the performance. First, the operation has been improved as a whole. In total, the consolidated premium income was CNY 101.3 billion (sic) [ CNY 178,483 million ]. Year-on-year growth was 0.1 -- 1 -- 0.9%. And the consolidated revenue was 1.1 -- 1.3 (sic) [ CNY 101,363 million ] and grew, up 1.6%. Profit attributed to the parent company was CNY 10.55 billion. Year-on-year, the growth was 86.8%. ROE was 10.74%, up 4.52 percentage points. ESP was CNY 0.05, up 19%. Based on the accounting principle of Chinese enterprises, the consolidated revenue of the premium and the profits attributed to the parent company made a new record high. Since the 13th 5-year plan, we have been optimizing the structure, and the efficiency have then been improved. In 2024, the efficiency has made a new high. Year-on-year growth was 170%. Based on the Chinese accounting principles, each business segment made the -- profits. And domestic managed -- domestic performance was over 99.8%. And the financial asset reinsurance oversea ratio was 89%. And the life and health protection type business was 90.6 (sic) [ 96.80% ]. Primary P&C increase was 99.6%. We are committed to the long-term investments and value creation investments and steady increase investments. Therefore, the profits from the investment have been increased dramatically. The total investments revenue was 19.3 billion (sic) [ CNY 17.3 billion ], up 80 -- 86.9%. And the total investment yield was up 2.06 percentage points to 4.83%. Based on the principle of Chinese accounting, the domestic stock comprehensive investment yield was over CSI 13 (sic) [ CSI 300 ] benchmark by 600 basis points. The overall (sic) [ overseas ] stock performance yield, it was over Hang Seng Index benchmark by 500 over -- basis points. We are serving for the national strategy. And our company make the best out of our primary business, that is the reinsurance; and to enhance the social efficiency; and stabilize the overall performance of the society. So for the [ civil ] economy and the society development, in 2024, in various business segments, the growth was over 19% (sic) [ over 15% ]. The inclusive insurance covered over 200 million people. We've served over 10 million SMEs. Primarily, we are focusing on the security society investments. I -- we are generating our products one generation after another with our own models. That covers the typhoon, earthquake and flooding insurance. Those models are self-developed and well established. They are the pillar of our business and the insurance service. In the trialing stage, we were the chief policy writer. And so we also have our comprehensive insurance [ meeting ]. And we also issued -- we also produced the relevant research. Together with the research institutes and the industry associations, we come up with high-quality development guidelines for China. Secondly, we are working together with the climate change initiative of China. And me personally take the lead of the special committee and come up with the special guidelines. And we set up the research center on climate change. As the only one pioneering organization, we have completed the task commissioned by the PBOC on the pressure test of typhoon. Together with the China meteorology organization, we're setting up the first forum of Baihua Shan, which is focusing on the mitigation of the risks. And we are focusing on the development of the reinsurance market. And we are working with the reinsurance center development in Shanghai and to -- covering the Continent Huatai agency. All of the three have been -- established their bases in this center. We are working with the insurance center in Shanghai and actively joined in the insurance trading platform. Together, we have the insurance policy, where we share with the internal and the external outlet. And for 3 years, we published the research institute of (sic) [ annual reports on ] the reinsurance business in China. That is the guidance for this business in China as a whole. Number four, we have been deepening the financial service. We are focusing on the cutting-edge development of the financial technology and focusing on the transformation of technology and research. For 26 years, we had been the presidential committee members of the reinsurance association. And we are ranked #1, as our comprehensive service capacity. We have been -- researched the inclusive policy products, which covers 1.3 million (sic) [ 13 million ] people every year. And we are working on the service with the Belt and Road countries, as the chief of the consortiums of the belt and the road insurance. We have helped the -- 64 key projects and -- offers over CNY 80 billion. Through the [ choice of ] technology and experience, we offer the insurance service to the SOEs and cover them from the political risks and that -- [ volatiles ]. Number three, we speed up with the technology; and we are updating our technology digital strategy. And through that, we updated our service and products. And eventually, we made the products and development appealing, but to do so, we set up our policymaking. And we have the road map to get the targets. And we are optimizing our reform and actively set up the [ debt ] management company and set up the technology company. So those [ 2 ] pillars are the strong supporter for our development. We have been enhancing the 3-year plan. And we set up the quality standard. And we also -- which had set the standard of this kind. We set up the [indiscernible] standards and -- which also are new establishments. Secondly, the technology has been used to empower, which have been used in the middle office and the back office. Then they can drive the precise decision-making. We are updating as the platform is managing the risks. And the self-development risk management system can be used in the direct insurance and reinsurance. We set up Lingshanjie AI platform, which can empower different business scenarios. We are enriching the business ecosystem that covers the earthquake, typhoon, health and life insurance. And we are updating the EV insurance. And we also launched the Internet insurance. Number four, we have the very steady, effective risk management. In 2024, each business segments had sufficient solvency. For 11 years, we maintained at the A or above at S&P Global rating. The best rating has been always A or above for 15 years. Now I'd like to call the business segments personnel in charge, to give you the idea: first, Mr. Wang Zhongyao, to give you an idea about the P&C reinsurance.

Distinguished investors, analysts, media friends, now I'd like to cover you the P&C reinsurance. To beginning with, let's have the domestic view. In 2024, we consolidated our primary position in this market in the mainland China. We used our advantages, expertise; and create values. In the domestic market, insurance revenue was CNY 22.5 billion, up 1.6%. Reinsurance premium was CNY 38.7 billion. Excluding the one-off insurance, the premium growth made a new high. The contract premium was CNY 36.9 billion. The efficiency -- and the fluctuated (sic) [ facultative ] business was CNY 1.7 billion. Domestic ratio has been stable. The combined cost ratio was up 0.33 basis points to 99.86%. In 2024, the major business have been stable. Motor was CNY 11.05 billion, up 5.6% (sic) [ 5.9% ]. Commercial property was up 19.9% (sic) [ 17.9% ] to CNY 7.8 billion. Liability premium was up 11.2% to CNY 7.07 billion. Engineering was over (sic) [ up ] 3.2%. We have been consolidating our advantage in the emerging area. It is the -- our service [ and creative ] to the national development. It is the untapped water. In addition, it is the innovation for our products. And we make the best out of our platform, the data and technology. In [ 2025 ], in the emerging area, the revenue of premium was CNY 3.03 billion. At the non-motor reinsurance business, the portion was 13.2%. Among that, IDI was 22.2% up. And other liability insurance growth was all astonishing. Let's have a look of the oversea P&C reinsurance. In 2024, there were a lot of the mishap of the world. The reinsurance was [ at the weight ] of cycle. We expanded our advantages and proactively restructured our business, and we have the very high efficiency of the policy writing. The revenue was up 11.5% to CNY 23.35 billion. The total premium was up 14.1% to CNY 26.5 billion. Among that, Chaucer business was CNY 22.26 billion, up 17%. Other oversea business revenue was -- premium was CNY 4.29 billion, up by 11 -- 1.1%. Combined ratio was 89.38%, up by 3.64 basis points. After acquirement of Chaucer, the quality has been very stable. The ROA was rather high. From 2019 to 2022, the CAGR rate was over [ 19.3% ]. The cost ratio on average was 93.35%. And the ROEC was 19.2%, up by 0.4 basis points. In 2029 to 2024, ROEC was over 12.6%. Those are the performance of P&C. Thank you very much. Now let's pass the floor to the Chief Actuary, Assistant of the President, Mr. Tian Meipan, to cover the L&H.

Distinguished investors, analysts, media friends, now I'm going to cover life and health reinsurance. Domestic interest rate has been dropping. As you know, the 10-year national bond rate has been dropped to 1.6%. The saving products has been the driver of the growth in China Re and insurance. These have been the pillar. China and Singapore development has been at the very high base, which is mainly driven by the rather high interest rate of U.S. dollar. We have the very competitive landscape, and we are -- actively face the external situation. Therefore, the premium had been stable. And [ its profits ] have been increased. You might read those pieces of the information [ from our detailed ] reports. Probably our revenue was not that high, but the profit have been quite high. In the life and health, revenue was CNY 9.8 billion and total reinsurance profit was CNY 4.2 billion. The net profit was CNY 4.2 billion, up 225.3%. We have been updating the medical service -- and dedicated to the long-term value creation, so we seized the opportunity and managed the profit and the loss. We operate under the compliance and make the best out of our existing businesses. The domestic financial (sic) [ reinsurance ] business was CNY 15.3 billion. And we were actively developing the oversea business. The oversea business was over CNY 3.3 billion. We have been actively optimizing the protection-based business. The profitable medical insurance was accounting 87.5%, up 11.9 percentage points. We seized the opportunity of the [ profit medical serviced ] and updated the products. And we promote the transformation of the products and we then realize the long-term development. In 2024, the profitable medical insurance was over (sic) [ up ] 15.5%. We were actively in developing the profitable medical insurance and make the best out of the existing business and also be empowered by the technology. The overall cost ratio was dropped from 97.8% to 96.8%. Those are the performance of life and health. Now I pass the floor to Mr. Li Xiaomin, the President of the China Continent Insurance.

Dear investors, analysts and media friends, now I'm going to have P&C primary insurance. In 2024, P&C primary insurance [ profitable ] has been improved. And the risks have been measured better. The overall performance was at the upwards trend. The primary insurance revenue was CNY 46.9 billion, up 0.8%. The primary premium was CNY 50.7 billion. Among that, the motor line was CNY 25.8 billion, up by 4.1%. Non-motor line was CNY 24.9 billion, up by 1.6 percentage points (sic) [ 1.6% ]. In 2024, we had been reducing the cost and managed the cost structure and enhanced the quality. The overall efficiency had been turned from negative to positive. The combined ratio had been reduced to 99.66% from the 100.78% the year before. We have been optimizing the structure. For the motor, the renewal rate was 68.4%. [ That consolidated ] our existing base. We have committed to the target and focusing on the family vehicles and optimizing the allocation of the resources. And motor insurance, the renewal rate was 7.8 (sic) [ 68.4% ]; and the proportion of the premium of household was 64.5 -- 64.8 (sic) [ 65.4% ]. Year-on-year, our number of the vehicle underwritten was 2.9% up. The primary premium was CNY 11 billion, up 10.8%. Agriculture insurance premium was up 11.9%. Commercial property premium was up 17.2% to CNY 1.4 billion. In fact, we have put the priority to the risk management -- and effectively reduce the -- mitigate the risks. The primary premium surety rate was down 13.4%. And the bad debt rate was down 0.14 percentage points. All of those are the performance of my segment's, P&C. Now I pass the floor to Zhai Qingfeng to cover the asset management.

Distinguished analysts, investors and media friends, I'm going to brief you the asset management performance in 2024. Because of the policy stimulation and development of new productivity, the performance of the Chinese economy had been stable and progressive, but there are still the issue about the weak [indiscernible] drive. And there are lots of uncertainties both domestically and internationally. Therefore, it is -- very negatively influenced the pricing of both Asia and [indiscernible] markets. And the interest rate in domestic China has been very [ flattened ]. The high-quality asset was in short of supply. Facing those kinds of challenges and situation, we are committed to the long-term value-based and profitable investments. We were actively to seize the opportunity of the market to optimize the strategy and proved -- and mitigate the risk. On one hand, we improved the profitability's resilience. On the other hand, we achieved a very good performance. And the long-term result was -- and the total investment income was up 80.9 (sic) [ 86.9% ]. And net investment -- and the total investment yield was up to -- 2.06 percentage points by the end of 2024. The total investments was up 9.4% to CNY 443 billion. On the allocation of the assets, it is aiming to go through the cycles, go through the sectors, make the best out of the portfolio and try to be balanced and steady. The investment -- the equity was taking 14%. And the investment to the associated company was 5.7%. In the -- in fixed income investment, we have the reservation on the bonds. And we seized the opportunity of -- the opportunity windows and moderately seized the opportunity -- aggressively seized the opportunity and optimized our positions of the portfolio. At the external, we seized the opportunity of the durations and the -- in equity. On the equity and investment funds, we have been very stable and make the best about our core business. At the key business area, we seized the stability. And the secondary equity had been increased 14%. On the structure, we're focusing on the dumbbell-shaped arrangements. And the foundation could be the high-dividend investments. On the growth rate, we have some oversubscription of the EV and AI. Those are the cutting-edge area. And we are crossing the different business sectors and then seize the opportunity. The secondary equity market performance was over the market average. Alternative investment, it's centered with the national policy, which is serving to the reinsurance -- insurance and reinsurance business, mainly technology, medical, AI areas. They are full of potential. And we are focusing on the products that could go through the cycles. Those are the performance of the asset management. Let's move our floor to Mr. Zhuang Qianzhi to give you the outlook.

Now I'd like to brief you the outlook for the future. Based on the market condition, China insurance and reinsurance are still at the strategically important period. There are a lot of opportunities by Chinese modernization and also the historical opportunity of the political situation. And there are the structural opportunity of the upgrading of development. Chinese economy in long term is trending to be positive. In the 23rd meetings (sic) [ third plenary session of the 20th CPC central committee ], there are lots of the reform measures that generated the demand for insurance and reinsurance. The next step will be the financial reinsurance reform. And then the focus will be shifted to the insurance and reinsurance area. Facing the demand and the expectations from the government and the public, I think, in the 9 to 10 years, Chinese insurance will catch up their weaknesses. And we also welcome the very big developments. We will seize the opportunity to contribute to the economy, the [indiscernible], the [ well-beings ]; and the proof from the -- [ prove ] the public from the natural disaster. We will make the best out of the insurance and reinsurance and [indiscernible] well its functionality. We are facing lots of the challenges and new situations, but the strategy has been strengthening the functional role and being steady and being progressive. The development should be based on the size, but our investments should be healthy and steady. We will try our best to push our company to the high-quality development in the new era, spare no efforts to make the return to the investors and shareholders. How could we make it? First, we will strengthen the functionality of reinsurance. We have 5 major area centered with the climate change, Belt and Road and cultivation of new productivity and the revitalization of the rural economy, also the low-altitude economy. We will also complete the service strategy and the product lineup. And we will [ serve the rescue ]. And we will promote the insurance and the reinsurance business development. So for this way, we can show our commitment. Secondly, we will focus on the high-quality development focused on the major business. We have 1 major and 2 supplementary development structure. And we will continue to reform ourselves and make a new breakthrough for our business. We will also push the development and the investment of the urban insurance and enhance the ROA gradually. Third, we will enhance our core competitiveness through the digital transformation. Technology and [indiscernible] will be the way to make it. AI will be then used in our business, and steadily, we will go to the -- abroad. And our products will have more innovations. We will have more coordinated management and alignment development. The risk pricing and the cost management will be first launched. Number four, we will strengthen the risk management and risk controlling. We will have a comprehensive, penetrating, proactive compliance. And the management risks covers the climate change risk and the political -- geopolitical risks. We will build up a barrier in order to improve, to safeguard the high-quality development. Those are the result announcement of China Reinsurance in 2024. Thanks again very much, for the investors, analysts and media friends, for your long-term attention and support to our company. Now I pass the floor to Mr. Liu Yuanzhang, the host of this event.

Just now, the management team just briefed to you the performance in 2024, in many aspects. Now without further ado, let's move to the Q&A session. We have the Q&A session available for both on-site meeting and the telephone meeting. [Operator Instructions] In order to give more chances for different people, please raise no more than 2 questions. Before your question, please let us know your name and your organization. I give the first chance to the on-site attendees.

From [indiscernible]. I have 2 questions. First, based on your presentation just now, in 2024, the performance has been improved, generally speaking. In the next year, how are you going to implement high-quality development in order to develop yourself as a world-leading reinsurance company? Secondly, I want to ask. What is your take about the Chinese reinsurance business in terms of the global market? As the representative of Chinese reinsurance company, what is your next step, strategy for going abroad? Those are my questions.

Thanks very much for your question. Regarding your first question, about high-quality development in China reinsurance and develop ourselves as the world-leading company, I will take it. For your second question, it's about the global development of China Reinsurance company, Zhongyao and I will both take it. For the high-quality development, I think it's better to revisit our action plan of the world-leading insurance company development. This action plan had been launched last year, in June. In that action plan, it has been mentioned, by 2035, China Re will be developed a strong company with Chinese characters, with strong market positions; world-leading, comprehensive reinsurance company. In that action plan, we also emphasized the [ 1 by 2 parts ] development model. In 2034 -- 2035, we will realize this vision. In order to make it, we have 3 stages. First, from 2023 to 2024, we will accumulate our capacity. That means, by the end of last year, we had accumulated the foundation to be as -- to be the world-leading company. Second stage, from 2025 to 2027, we are expected to make breakthroughs. In the next coming 3 years, it is the period from 2028 onwards to 2035. It is the leap forward stage. In 2024, it was the year for Chinese reinsurance to wrap up the first stage of development. It was also the first year -- second year of the 14th 5-year plan. Based on our previous performance, it is fair to say that Chinese reinsurance has wrapped up the first stage in a very high note. First, the revenue and the profit have made the new high since the 13th 5-year plan. Second and -- our 7 subsidiaries and 6 operating platforms oversea were all making profit. Number three, we did not have any major risks. That is the bottom line. And we struck the right balance between the safety and efficiency. Through the preparatory stage in the first 2 years, 2023 to 2024, we had a very good foundation to be the world's leading insurance company. In 2025, we are going to enter the breakthrough period. As you may know, in 2025, it is very crucial for us. It is the final year for the 14th 5-year plan. It is also the planning stage for the 15th 5-year plan, so we have 2 aspects to work on. First, we will implement the [ 23rd meeting ]; and so we will seize the opportunity of the reform. And as -- earlier this year, [ we ] launched the top 10 items for the reform. And based on the 10 reaction -- reform, we made it localized to each company. Secondly, we have the investments. We have the -- in 2025, how could we do that? We have the -- we need to make the high-quality development and eventually enhance the core competitiveness. How could we make it? I have 3 aspects to cover. First, as you know, we need to be firm on our strategy. For those who need us to be firm, we need -- we will be strong on that. First and foremost, we will be implementing the development of the new -- of the major business and make the best out of the functionality. Previously, Chinese financial company did not commit much to its major business. Probably the financial company takes some business of the real economy and it is vice versa. And they have done very diversed and mixed business under the same umbrella through the many years of the practices. And we think it is important for us to focus on the major businesses and make the best out of the insurance and reinsurance and stabilize the society. And as the reinsurance company -- reinsurance is the insurance -- through the insurance company, we have the professionalism. We have the expertise. And we will be able to empower the insurance company and to diversify the risk and help the development of the insurance company. Secondly, we will be stable and progressive and make the values. That is the tone of our development. At the preparatory stage, we have been emphasizing stable is over the development, but now at the second development stage, we want to make the breakthroughs. We want to be stable and we want to be progressive at the same time, so that means we want to make the breakthroughs one after another. And on the idea, we are focusing on the value improvement. And we focus on the net profit, the size and the quality and the value for the business and the society. Number three, we want to -- we have the mission for the company. That is develop [ with the sized ] and underwriting with efficiency investments, with the firmness and steadiness. Those are the missions accumulated through the years of practice in the business. Those missions reshaped our logic and our idea of development, which we have to be committed for long. Development has to be reliant on the size, but we cannot blindly follow the size. The growth could be moderate. And that will definitely sustain the business for the long-term development. Secondly, the underwriting should develop with the efficiency. For the underwriting, we have to make the profit by the business itself, instead of relying on the subsidy or the remedy from the asset, so -- which is the kind of the challenge to the traditional idea. The investment has to be stable. Insurance, what it is, insurance has to be stable, has to be conservative and prudential. That's why we emphasize the value creation investment and long-term investment and steady investment and investment with discipline. So I think we should have the strategic firmness, and for this, we need to be committed. We have to do so. The high-quality developments, the second aspects of that is, for those area needs to be reformed, we will do so. For the requirement -- when there is the need to make the innovation, we will be brave enough to do so. As you know, in 2025, the China Reinsurance is at the breakthrough period. At our action plan, it has been mentioned that there are 8 breakthroughs to be made in order to push the company to be completely transformed. What are the 8 action areas? The first and foremost: the functionality, the role. We will create a new high. As the specific and detailed area, they need to take this responsibility. Second, the operation should make a new high. And through the improvement of the core competitiveness, the performance should have a new development. Third, the digital transformation, including the digital economy and the digital transformation. And also we will enhance our capacity to respond to the natural catastrophes and climate change. Climate product lineup should be innovated. And we have been emphasizing on the synchronized innovation. Number five, we have to make the breakthrough at the global stage. We are quite leading the industry through the internationalization. We want to make the breakthrough in this regard. Then the risk management, we'll also make the breakthrough. And the precise management is, of course, in other area of making breakthroughs. And the talent pool, we will get something new and some breakthroughs. Those are the action plans. In the developmental stage, in this stage of development, we are expecting to make those breakthroughs, especially in the 8 area. In 2025, we will have the developmental and the breakthrough stage. On those fronts, we will definitely make the innovations and we will make the breakthroughs. And through the action plan, we will put the reform in details, in action. And secondly, for the high-quality development, we have been always emphasizing the long-term development and the long-term investment. We have to strike the balance between the short term and the long term; between the regional, to the overall development. Therefore, we can make the development sustainable. So specifically, we have to strike the right balance between functionality versus profitability. On one side, we will pursue the economic values. On the other hand, we want to play out the effects and the values of the insurance; and bringing the benefits to all the shareholders, including the staff and the customers. It is the answer for your first question. Regarding your second question. I know you are quite concerning about the Chinese reinsurance business development. I'd like to give you the idea from 2 basis points. First, Chinese reinsurance company, last year, we made some progresses. Secondly, I think, compared with the international benchmarks or our targets, what are the efficiencies? Chinese reinsurance business, as you may know, has been developing through decades. Almost 20 years ago, China joined in the WTO. Then Chinese reinsurance market opened up to the world. I think the past 20 years witnesses the remarkable achievements of Chinese reinsurance. Before, the reinsurance was controlled by the law. 20% of the insurance company profit should be directed to reinsurance. In 2006, this market was completely opened up and free from the policy controls. Now there are 15 reinsurance companies operating in the mainland. Among them, 8 are international company. 7 are domestic. And as you know, for the really [indiscernible], those big names are the international reinsurance companies operating in China, except from the 15 reinsurance policy writers. There are another couple of the -- companies from the oversea business from the oversea countries. They're operating in China through the off-line platform. So what is the latest [ lined form? Lined ] -- I think the oversea reinsurance takes over 40%. And China reinsurance takes 26%, and China's house and health take -- health takes 55%. And P&C and H and L. -- in total, our company took over 40% of the market share. Those are the Chinese landscape of competitiveness. It is fair to say that, after 20 years of developments, this market tend to be highly competitive. Chinese reinsurance survived through the highly competitive environment. It is not an easy achievement. We are working with very competitive players and we achieved such marvelous status quo. Now let's have a look of the globalization of Chinese reinsurance company. As I mentioned, that -- internationalization has been a feature of this business. In 2011, we joined in the [indiscernible] market in London. And then we started the international business. In 2015, we acquired the U.K. Chaucer and syndicate. After the acquirement of the Chaucer, they operated it quite well for 6 years. And they have been ranked top 3 in this market. So China's reinsurance globally have been engaging and -- with the international partners. And our ability for international engagement had also been improved. So the market-driven international development are both progressing and the achievement have been pretty good, but the results, I have to admit that there are some gaps. First, Chinese direct insurance company had been offering rather low redistribution of the profit. And they tend to keep the profit for themselves. Secondly, Chinese reinsurance market, globally speaking, is not taking a large portion, only 4%, of the international reinsurance market. This 4% is not compatible to Chinese GDP size [ and ] the global shares. The overall domestic premium was 22 million -- was 22 billion. It's less than 1% of the total premium market of reinsurance. Through all of those factors, you can definitely tell the gap and the differences. Secondly, though -- I think there are very good progresses. And we trust the -- our technology, our expertise and professionalism, but we don't have the very profound exchange -- experience in the reinsurance business. Therefore, I believe there are a lot for us to do in order to get the international stage. So this is the very objective introduction for the market-driven development and the internationalization of China Reinsurance. Under our company, the P&C insurance has always been commissioned by the group to operate the oversea organization, including Singapore and London. Those agencies oversea are mainly managed by the P&C subsidiary. That's why I pass the floor to Mr. Zhongyao.

I'd like to share with you the P&C insurance performance specifically and share with you the management situation. Our company has been committed for the high-quality development. And our international business is developing under this kind of the big idea. First, we have always been analyzing and focusing on the global changes. And we know that there -- for the detailed segments, for the detailed regional market, we have the close analysis on that. And we change our policies of products and the operation strategy according to the status quo. And with the changes of the fee -- and we also meet the demand. And then we enhanced our resources. We give the priority to those products with sufficient expenses, sufficient underwriting fee. In the meantime, we'll attach the great importance to -- secondly, we will seize the opportunity of the market and optimize our business structure. And we will -- also diversified our profitability and products lineup. Secondly, we attach the great importance to the management of the risk. We have been improving the risk management system and develop our professional capacity. On one hand, we focus on the macroeconomic situation of the world, including the climate change, geopolitical changes and the natural disasters and some nonnatural disasters. In the meantime, we focus on the fixed and the risky factors effects on the pricing and continuously enhance our risk management plan and detail the limit and the quota management. In the meantime, we quantify and -- we will quantify the business through quantitative and qualitative method. We are enhancing the management system and enhancing the management and utility of those roles. In -- we also set up that [ quest ] from 2023. In 2024, the [ quest ] platform is at stage 4. Now this platform is open to major natural disaster, typhoons. They can then offer the quick calculation and the claim. So through this way, we -- they can help us to make the price by different regions and different portfolio. Number three, we have always been enhancing the [indiscernible] the products over the online platform and then make the synergy effects. Through different way of [indiscernible], we can match the business -- and sorted out the relevant risk and control. The -- in the meantime, we use the support from [indiscernible] to give the best resources to the high-quality products and high-quality client base development. In addition, we seize the opportunity of the reinsurance market and researching on the third-party assets and alternative assets. In the recent years, there is a synergy development of both the onshore and offshore market. Therefore, we transfer the oversea market business expertise to the domestic market. And we considered the different demand of the 2 markets. Like, in the new energy, we accumulated some expertise which can be transferred to the Southeast Asian market and then provide the targeted service. That is my answer.

Mr. Zhongyao just made some supplements from the operation perspective. Internationalization have been the must taken part for our developmental journey, and it is also natural for the company to go through it. For the target and measures, I want to add a bit more. Through those years of development, China Reinsurance company had been the most internationalized Chinese reinsurance company. So by my rough calculation and comparison by the percentage of our business, our international business has been taking over 20% of our overall business. From the asset perspective, our oversea asset has been taking 25% of the total asset in the company. So those are the international level of our company from the 2 parameters. We have the organization in 11 regions and countries, like in Sydney, Hong Kong, London and Singapore. Those areas, you can find our organizations and office. We have over 1,000 partners all over the world, so it is fair to say that, among the Chinese enterprises of insurance, we are the most international one. The -- even this figure have been impressive for the large insurance. Chaucer have been acquired like 6 to 7 years ago. And after the acquired -- acquisition, the size and profit has been doubled. Chaucer had been ranked at the top 3. And the performance have been [ proven. And last year ], Chaucer had been supporting Chinese reinsurance -- had been developing our company to make the innovation in the risk -- for the future, what will be the future? In -- are we going to make the international leading insurance by 2035? The target is to be the top 5. Now we are the first in Asia and #8 in the world. By 2035, are we going to be the top 5 of the world? That is the vision. In order to make it, first, we need to take the international pathway of development. Reinsurance is -- based on the international market results, the internationalization, the reinsurance business will not play out its effects. On the other hand, we will make the best out of internalization from the strategy. It will be stable and prudential. For the allocation of the organization, we are not pursuing for the size and the quality but for the quality and stableness. At the key area, the key region and the new emerging markets like the Belt and Road initiatives countries, we will do our international presence. On the other hand or secondly, we will focus on the size. That is [ true ]. Second and more importantly, we are focusing on the administration level and the operation capacity of the oversea business and seize the opportunity of the cycle and make the alignment and the synergy between the domestic and the international business. So in order to be international, we have to be supported by the international staff. It has been emphasized many times that we have to cultivate the international talent both by ourselves internally, also hire the talents externally. We have started the recruitment campaign many years. And there were some risks of the political risks. And whatever -- in our development map, all of those ideas will be reflected and will be included, but international development have been the must taken pathway. And I think we are committed. And we have the resilience to do so and we will try our best to do so.

Thank you very much, Mr. Zhuang. Second question...

From Huatai, Li Jian. 2 questions. First, the commercial life and health insurance. Second is about EV. China Reinsurance has been a major stakeholder of the property insurance and the medical insurance. Starting from last year, there were many policy changes not limited but included to the sharing of the data, so what do you think about its impacts on the commercial medical insurance? What are your innovation in this business? Secondly, it's about EV. I want to ask you that -- what is the situation of development for the EV insurance? Could you give us some ideas from insurance and reinsurance business perspective? And from your answer, I'm going to see whether we can have the better achievements in these regards.

The first question is about the medical -- commercial medical insurance. Second is about EV. You're focused on both the insurance and reinsurance. Therefore, we, I will pass the floor to Mr. Li Xiaomin from China Continent and Zhongyao from China P&C -- from P&C insurance.

So for your commercial health care insurance. It has been the topic for both 2024 and 2025. It's coming from 2 aspects. First, the category B, whether it is included. Second, it is the [ 1.3 plus M ], this concept. So commercial insurance and medical insurance, there are a couple of the aspects to cover. First, I want to emphasize that the category B of the health care insurance show that the commercial insurance had played a role in the health care system. Why should I put it in this way? First, our primary insurance has been covering basis points, basic expenditures. On top of that, to be honest: China cannot cover that part of the expenditures. We have over 1.3 billion people. They all have their insurance, medical insurance. So I think the economic development level of the country is not yet too such high, so we can't cover so much. Second is about the fund payment, the income and the expenditure. The expenditure is way over the income of the fund. Therefore, there is a very tight balance to be struck. Therefore -- it has been realized that, the commercial medical insurance, as a support, as a pillar of the people's health, it is very important. Third, as we all know, that -- the public are in great demand of the excellent drugs and doctors. Probably you have seen that, the [ Huashan ] doctor from Shanghai, they have shared with us a lot of the questions, but all of those questions are related to the pursuit of the original medicine and medicine products. So we think there is a great demand. I think the development of the medical insurance. From 2017 to 2022 -- to 2020, it was the high-speed development. And after that, we come to the accumulative period. So now the -- what is the reason behind? It is related to the reform. The reform, on the positive side, it controls the growth of the expenditure and the loss rate -- it's 38%. That was the payments ratio. It is rather low. So under this kind of the low rate, the consequence is that the experience is not so good because -- why it's like that. Well, as we know, the reform and the procurement campaign, all of those policies surprised the accessibility of the good health care and the drugs. It is rather difficult to make it accessible. Now some of the national negotiated drugs can be used in the hospital. There are double channels. Then there is the transcribed -- there is the transfer of the transcripts from the hospital. So the reinsurance policyholders will cover those good health cares, but the policyholders, they cannot get the access for that because of the policy settings. Under this kind of the situation, we believe there is some pain points. Therefore, with the development of the commercial, it's not so good. In 2024 and 2025, there is the category C. That means the [ DRP ] can be replaced. The double channel access will also be available for that. Therefore, the category C sorted out some of the drugs, the accessibility issue of some of the drugs, so for that, the experience will be better. And that will stimulate the demand for commercial health care. So by a certain time, it will be very crucial points. In addition, the regulatory authority sorted out the category issue. If the regulator category could eventually -- compatible, I think, the next step, demand will be released. And then I probably believe that will be the prime time. That will be a very important point, but there are some negative notes. When it has the accessible issue, the payout ratio will be low. And when it's -- so at this moment, category C, the category is very narrowed so it's controlled well. In the future, if it is expanded, the payment ratio and the risk management will be more salient, so we are looking for the way like the integration and many other way to do so. How could we through the -- how could we sort it out, the issues? Through the risk diversification. And in the meantime, we can still keep the profitability of our drugs. Those are the situation of our company, so generally speaking, I think the next step will be the -- I think there will be a lot of the potential. So what will be the innovation of the health care insurance? From the products perspective, we have developed a lot of the new products, which is aiming to enhance the customer experience and then reduce the claim rate. Before, the policyholder did not understand that they can only get the claim over 10,000. So [ we got the ] claim. Those claims was not well grounded, so they [ should not made it ]. Second, we have the coverage for the Internet consumption. Previously, we don't have this coverage, so we make the breakthrough. Third, we have the disabled insurance for those who suffered from the losses of the functionality of the body because of the hospitalization. They can get the claim. Number four, we have the claim for a targeted group or for those people working in the military, for those working in the crew of the vessel. We have dedicated targets for them. And the accessible business, we have the relevant issues. We have a [ series ] of the drug issues -- the drug development system. For the industry integration, we have 3 aspects to cover. First we set up the Internet-based ecosystem. We include the distributors, the supply chains, the operators in the platform. For example, the operator could facilitate the marketing, the sales; and enhance the administration. The supply chain will deliver the drugs and the product. Number two, as I mentioned earlier, we can -- we're always enhancing the -- we updated the products. Number three, we actively joined in the research. We have worked with [indiscernible] about the comprehensive payments scheme. So generally speaking, I think there are 2 points to make. First, the commercial -- there is the greater potential for the commercial insurance. Second, under these big momentums, we have to manage the risks. And those are...

About then EV. From the insurance perspective, I think it's very stable. And from the association perspective, the company premium has been growing, up 52.8%. From the comprehensive ratio based on the [ actuators ]association of China's, overall industry premium revenue was 140 billion. The ratio was [ 1.7% ]. And the losses was [ 5.7 ]. Continent insurance was in line with industry and the ratio was at the same level. This is the development situation. For the future and speaking about the efficient management, as we all know, in 2025, June -- January [ 20 ], Chinese ministries -- 4 ministries issued the guidelines on development of the new EV and the regulatory framework. It's lined up the -- outlined the strategies to enhance the market situation and ensure the high-quality development of EV. In 2025, the development trend let us know that the growth rate can be very stable and is rather high. The penetration rate could be over 50%. Premium revenue will account over 20% of the total premium for the vehicles. The company will use innovation and seize the opportunity to develop our products [indiscernible] to the EV and differentiates the products from other operations. We have 5 aspects to work on. We are the coordination of the internal, external data; and work together with the OEMs; and joined in the data research; and set up the specific pricing model; and helping the high-speed iteration. And the model will be highly distinguishable. And based on the client base and profiles, we will make the precise position. Second, we will make the coordination. Different brands will have different -- through different -- we set up the differentiated. For those -- in the meantime, we will encourage the people from -- and differentiate them. And secondly, we will seize the opportunity to -- thirdly, we can use the industry and develop -- and speed up the -- and in this way, we can optimize the costs for the repair and maintenance. And we found out the breakthrough and the loopholes and developed the relevant -- and set up the platform dedicated to the EV. Number four, it is to prove the risks. We set up the specific risk system. In one hand, we coordinate well with the industry and prevent -- we prevent the missed policy application. And we also give the incentives to the right behavior. And number five is to enhance the overall comprehensive performance and offer the various insurance and protection and promote the smart driving and enhance the overall situation. All of that is to -- through different measures. The company can then develop the professional and intelligent EV management system and continually, to enhance the high-quality development of the company. EV reinsurance is different. It's the same with the petrol car. For the compulsory insurance, there is no reinsurance. And most of the company, they have made the comprehensive -- in the domestic market, there will be -- so there will be the [ fluctuation ] commission, so through this way, it's rather the same. It's rather difficult to separate. As I mentioned earlier, that -- we are also seeing the technologies involvement. It is rather high-speed development. And some high -- some insurance company will sort it out, these uncertainties. Based on those possible trends, our reinsurance company has done a lot to deal with the situation. In the first half of 2025, I -- we set up the pricing and the risk management model for EV, which has been launched in the fourth quarter of last year. This platform is dedicated for pricing and risk management which are supported by the existing data of the claim of the EV. And we trained the big model. Through this platform, we can exchange the data with the insurance company. Then we can offer them the online quoting for the insurance companies so the quoting will be quick, swift and efficient. We have done some trials with continental insurance. Based on the results, I think the basic pricing issue can be sorted out. We have -- we will develop through this way. We hope we can gradually sort it out, the pricing difficulty of EVs; and help you to diversify some uncertainties.

Thank you very much. The third question...

From [ Phoenix TV ]. I want to ask that climate change has been imposing a lot of the pressures for insurance and reinsurance company. So how do you like to manage it well? Under this low interest rate, what is your investment strategy? So long-term investments -- and the [ CRC ] has been -- mentioned that 30% of the new premium will be used to the [ Asia ] investments. Under this situation, what will be...

About the climate change, could you let us -- Wang Zhongyao? And secondly, I will pass it to Qingfeng.

Thanks very much for your question. For the -- I think the climate change has been impacting our performance, mainly typhoon. Typhoon has imposed the -- has been -- destructed our -- a lot of the things in Hainan, which is mainly in the engineering insurance, the energy insurance, but in the domestic market we are the major insurance underwriters. Through the policy setting, we have done some arrangements, so the net loss was at the very controllable scale. Globally speaking on the international business: 2024 was very eventful. And for 5 years in a row, climate change losses have been impacting the industry, with the loss over 100 billion. Last year, it was very high, over 100 billion. Last -- the flooding in Middle East and the typhoon in the United States are -- were all destructive. So because of the cycles, I think those net loss was very controllable. That can be reflected in our performance. Some media might be concerning about the -- I think these are our arrangements. Therefore, I think it is within the 30%. In addition, a couple of days ago, there were an earthquake in Myanmar. By our examination, the exposure at that region was very limited. Generally speaking, I think, for the disaster risks, we have to take multiple measures to ensure the performance. Specifically there are a couple of the measures. First, we need to complete the risk management system and optimized our risk management idea and to manage the credit well. In the meantime, we need to enhanced our oversea overall administration. Secondly, we will continue to enhanced our domestic and international platforms. To manage the combined -- as you know, we have different portfolio management platforms, like CREST. This CREST could cover both the domestic and oversea risks. That offers the on-time monitoring and analyze by reasons by the -- regions. On the application perspective, we will adjust our pricing and portfolio management. We have done sufficient prediction of the climate change, and we worked with the relevant companies. And we have our own IP on different risk management risks. And we can optimize. In this way, we will enhance. Number four, our international business, it can be very -- and domestically, we will transfer to those who have sufficient cash. Last but not at least, we will make the best out of the [indiscernible] to mitigate the risk and diversify the risk portfolio and reduce the relevant risk exposures.

Thanks very much for your question on the climate change risks. Climate change risk has been one of the largest and most intimidating risks of human beings. It has been involved with many aspects. I'd rather not to -- describe it more, but you can have this kind of the -- direct feeling that what -- the natural disaster, and whatever the form, flooding, [ firing ], typhoon, had been very destructive. It has been described as once of thousand years, but that all happened in the recent years. So we have a lot of efforts on the climate change risks and we have put a lot of attention in these regards, and we are well prepared on that. We made our position in this regard. Why? Because we focused on the human beings, of -- the livelihood, on the rescue aspects. As I mentioned that -- as early as 2016, we set up the risk management center. And then it is the independent institute that -- specializing on the risk model. That is the only one. And the Chairman takes the leadership of the risk of the climate change rescue team. And I put a lot of emphasis on that. So earlier on, we set up the climate change research institutes in our company, which is focusing on the application of research in the insurance field. So it is fair to say that we are quite concerning about the physical risks and its impacts on the insurance and the financial service industry, especially its investment, its impacts on the [ heavily asset -- on the heavy ] asset, but now I think we have also updated our mentality that those risks are impacting a diversified -- of the financial segments, including the insurance [ advisory ] and other financial services. Secondly, one of the key function of reinsurance is to ensure the insurance, so we want to diversify the unique, the standing-out and the intimidating and the huge risks. On those aspects, we will continue as usual to mitigate and protect our assets from the risk, from the climate change risk. Second question, I will pass it to Qingfeng.

Thank you very much for this question about the interest rate, which has been dropping in the domestic China. Under this backdrop, I think it's impacting the overall risk management and our investment strategy. And under this kind of the situation, from the investment perspective, we will commit to the long-term, value-based and steady investment strategy. And we will also be committing to make the -- make the decision based on the risk situation. And I -- we have to use the allocation plus trading. In one hand, we will enhance the stability. In other hand, we will seize the opportunity of the changing environment. We need to do 3 aspects of job. So first, to go through cycles, go through markets and anchor the firmness and stability. We will research the market and make the portfolio best and then strike the right balance and adjust the balance and ensure the stable returns. Second, we'd like to diversify the product lines in order to ensure the certainty. On the fixed income, we have done the research on our asset allocation. Under the low interest rate, we have to make the right combination between the long-term and the short-term interest rate. And we are exploring the possibility of [ ABS and REIT ]. On the equity investments, we will focus on the dumbbell-shape investments. For the high-dividend investments, it will be the foundation. For those emerging technology enterprises, we focused on them and researched on them and found those companies with strong potentials. And for the interest-driven investments, we will focus on the medical plus technology. They are relevant to the insurance industry -- and find out the strategic opportunity from them. Number three, we will be adaptive to the changing of the environment so we can then develop the strategy. And on the fixed income, we will ensure the capacity building and use the fixed income-plus to enhance the overall return. On the quality investment, we will also seize the structural opportunity. In the meantime, in recent years, we attached the great importance on the system development. In the future, we will definitely use -- have the research allocation and operation and put all the three in one management. This management system will enhance the decision-making and give us the accuracy and flexibility. We will -- committed for the long-term, flexible and prudential strategic thinking; and uphold the long-term risk management attitude, trying to go through the cycles and create certainties and stable performance.

Speaking about the involvement in the investment market. There are a lot of the policies on supporting the involvement to the long-term investments. That helps the insurance assets to -- the assets and the value creation investments. That facilities the capital markets, the health and stable development. It is strategically important. For the -- our company has great confidence through the long-term development of the Chinese economy. And we think the future will be very promising for Chinese economy. The next step will be that we will implement the relevant requirements and action plan from the central government on joining the long-term market and seize the opportunity and spare no efforts in serving the real economy. In the meantime, we will help the stable and healthy development of the capital market. On the investments, I want to address a couple of the points. Low interest rate have been the situation for China. In the first 40 years of development, Chinese development has been anchored by the high interest rate, so the investment has been very profitable. And that subsidized the insurance a bit, but it has been changing. We have to make the new balance and rebalance of the development. In the recent years, we have done a lot on this. And I believe we have to update our strategy of operation. Under this kind of the situation, I think it will be lasting for long. I mean the low interest rate. Secondly, I think we have to seize the opportunity that is suitable for the development of this industry. We will be committed for the stable and for the well-coordinated development. So insurance is not standing alone. Insurance should be a service and should be a value-added part. Meantime, in the meantime, we will also enhance our professionalism and allocation so we will strike the right balance. Thank you very much, Mr. Zhongyao and Mr. Qingfeng.

Thanks very much. I think, at the interest of the time, I'd rather reserve the very last question -- opportunity to raise up the question to the online participants.

CICC -- from CICC. I'm [indiscernible] from CICC. And congratulation to your performance of 2024. At the interest of time, I will raise up only one question. Could you give us the outlook for 2025, the profitability and the operating trend? In addition, in the future, are you going to take the more active [indiscernible] distribution policy?

I'd like to pass this question to Meipan.

Regarding 2025, the results prediction, if we have more time, we -- I'd like to pass this floor to Mr. Zhuang -- question, but I have the answer to this question from financial perspective. There are 2 aspects: the first, the performance of the service; second, the financial performance. From the service perspective of the insurance, it's more on the liability, so what we are going to do in 2025 -- the debt. We have the very stable performance on the liability or the debt in 2025. And so I think this trend will be continued. Xiaomin has also mentioned that when he was updating you the performance. Continental -- continent insurance, for the first time, made the profit from the insurance products. I think the overall trend of the service -- overall trend of the business tends to be positive and on the right track. And looking ahead through 2025, the continent insurance company will perform much better. That is for sure. Second, from the [ debt ] perspective, let's have a look of the oversea business. Honestly speaking, as I mentioned, as Mr. Zhuang mentioned earlier on, I think the overall performance was very stable. And 2023, 2024 was very extraordinary. So as we know, Mr. Zhongyao mentioned that we are at the end of the cycle. And the Chaucer expenditure has been reduced in certain items, but they are overall in line with the, expectation, so I think, in 2025, it will be no problem at all. Chaucer have been very experienced in managing the credits and the policies. And from liability perspective, that is my answer. Now let's shift it to the asset perspective, about our premium, the finance results. There are 2 factors to be considered. First, on financially speaking, financial cost. I think it had been rather stable whatever the changes of the interest rate. And we included in the OCI. Therefore, the costs of the policy writing have been very stable. And this is more on the investments that might be the changing factor, the fixed income. You know that the risk management for our company has been very stringent. So the risk -- the credit risks have been very low. The largest risk for our company had been the interest rate for some assets because of the interest rate changes. It will -- not reflected in our profit and losses. For those, that can be only reflected in the profit and losses, as Mister -- mentioned, that this kind of the low interest rates will be continued for quite a long period of time. And I don't think there will be the possibility to get it up quite sharply. I don't think so. The interest rates will be fluctuating, but it will be rather low for a period of time. Therefore, the equity -- let's have a look on the equity. As Qingfeng mentioned, that -- well, first, in the secondary market, I think the segment -- the secondary market has been only taking a small portion of our business, compared with our peers. Secondly, we are actively including the high-interest-rate products in our portfolio. Therefore, the most important thing is that, I think, the Chinese capital market, for us, have been very promising, for us. I believe we are very optimistic for the future of the Chinese economy. So all in all, in one statement, I think, in 2025, in whatever measures, the financial measures or the performance measures, I believe we will be confident to deliver the target and generate the positive results. About the dividend distribution. Since the listing of our company, we have been committed to the very aggressive distribution. That is no less than 30% of the profit attributable to the parent company. So probably, you might ask, "By what financial -- by what accounting principles, by [ ICT 17 ], or the latest one?" I think the -- our listed distribution is according to the older version of the principles. Whether it will be -- the ratio will be up, it's quite depending on the 2 points. First is depending on the financial development. There is a connection between the two. And we always think that the dividend distribution should be connected with our performance improvement. If the growth rate of our performance and the profitability growth rate have been way [indiscernible] the distribution rate growth, for that case, we will definitely sacrifice a bit of the distribution of the dividend and make it stable. And in order to make it, we have to stabilize our ROA, our profitability. The ultimate goal is to improve the ROE of the company. And then we can create values to the shareholders and then we can generate more dividends to the shareholders. Secondly, as I also mentioned, that -- we have been always considering the existing shareholders and their benefits. When it's appropriate, when it's possible and when we are able to deliver, we will consider the dividend. And so [ whatever the center ] we are going to uphold in the future, I think the overall principle is like that. First, we will support development of the business. Second, we will consider the benefits to the shareholders. Thank you very much. That is my answer.

Thanks, Meipan. At the interest of time, I think this is the end of the result announcement. China Reinsurance company, since it gets listed in 2015, we have received a lot of the support and attentions from the investors, analysts and media friends. On behalf of the senior management team, I'd like to express my gratitudes to everybody of you. We have always attached great importance on the exchanges and communication with the capital markets. In the next stage, we will definitely make the better arrangements and connect well with the investments at home and abroad and including Hong Kong. And we will have more opportunity to speak face to face and let you know our ideas. And of course, we will know your expectations from the financial market. And in this way, we will create more returns to the shareholders and gains for the shareholders. At the interest of time's, I have to declare it is the conclusion of the 2024 result announcement of the China Reinsurance. Thanks for attending this event. If you have any other questions, please feel free to reach out to the IR team of the company. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]