New China Life Insurance Company Ltd. (601336) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning. Welcome to NCI's 2020 Annual Results Announcement. I'm Gong Xingfeng, the Vice President, Chief Actuary and Board Secretary of NCI. I will preside over this conference. Firstly, I would like to present the management today. They are Mr. Li Quan, CEO and President; Mr. Yang Zheng, CFO and Vice President; Mr. Li Yuan, Vice President; Mr. Yu Zhigang, Vice President. There are 2 sessions. The first one will be the overall performance of 2020, and the second one will be the Q&A session. We will provide interpreting for all the people online. [Operator Instructions] Firstly, let's start the presentation session. Mr. Li Quan will introduce the 2020 overall performance and the outlook. Mr. Yang Zheng will introduce the financials and investments. I will introduce the embedded value. Now let's give the floor to Mr. Li Quan.

Thank you, Mr. Gong. Ladies and gentlemen, good morning. Firstly, I would like to introduce the overview. In 2020, the main business results of the company are as follows. GWP was CNY 159.5 billion, up by 15.5% year-on-year. FYP from long-term insurance business was CNY 39 billion, up by 53.7% year-on-year. Embedded value reached CNY 240.6 billion, up by 17.3% year-on-year. NBV reached CNY 9.2 billion, down by 6.1% year-on-year. Net profit attributable to shareholders of the company was CNY 14.3 billion, down by 1.8% year-on-year. Total assets exceeded CNY 1 trillion, up by 14.3% year-on-year. Total investment yield was 5.5%, up by 0.6 percentage points year-on-year. Agent headcount reached more than 600,000, up by 19.5% year-on-year. Next, I would like to introduce the business. In terms of the business, the sudden outbreak and spread of COVID-19 weighed heavily on the global economy. China also took a huge battering. Residents' consumption decreased. Traditional sales channel locked. Facing these challenges, the company seized market opportunities, gave full play to the synergy of assets and liabilities and industrial coordination, integrated online and off-line businesses, innovated products and services, strengthened team building and risk management. As a result, businesses realized steady development. Firstly, GWP grew rapidly. Secondly, embedded value continued to increase. Thirdly, business structure remained sound. Fourthly, business quality remained stable. I will elaborate later on the 4 aspects mentioned above. In terms of social responsibility, the company responded to the Party's call in fulfilling its social responsibility. We have given full play to the advantages of the insurance industry and formed a charity system integrating insurance products, charity platform and voluntary services. The work done in 2020 are as follows. Firstly, the NCI Foundation continued the public welfare project for sanitation workers. This project has, in 2020, donated insurance protection to 330,000 (sic) [ over 830,000 ] sanitation workers in 133 cities nationwide with total sum assured of CNY 229 billion. Secondly, the company donated CNY 6.4 million. Total sum assured of CNY 71.7 million -- CNY 71.7 billion and supplies worthy of CNY 1.1 million to combat COVID-19. Thirdly, poverty alleviation project was conducted in 6 provinces and autonomous regions through insurance, education, industry and care, benefiting 19,000 impoverished people with insurance project total sum assured of CNY 1.8 billion. And the insurance project total sum assured was CNY 1.8 billion. Fourthly, the company's volunteer league has set 35 branches nationwide with more than 44,000 volunteers and more than 2,400 voluntary services. In terms of our strategy, in order to increase the competitiveness of the company, we have established a 1 plus 2 plus 1 strategy with life insurance business as the main body, wealth management, health care and old care -- old-age care as the 2 wings and technology empowerment as a support. The company will implement the model of asset/liability, [ 2 engine ] driving both volume and value growth. In terms of life insurance, the company adheres to the essence of life insurance and explores market demand. It has professional sales force channels and nationwide network and rich product system. Through the joint development of assets and liabilities, it provides customers with protection and wealth planning covering the whole life. In terms of industry certainty, the company has an integrated wealth management platform with AMC at its core, with asset under management exceeding CNY 1 trillion, a stable investment style and good synergy with life insurance. At the same time, the company joins the efforts in national social security system building through corporate and occupational annuities. The old-age care and health care industry is taking shape. A multiproduct senior care system encompassing urban and suburban areas and combining the north and the south has been established. And one rehabilitation hospital, 19 health center have been built under NCI's name. Looking into the future, the year 2021 marks the beginning of the [ 14th ] 5-year plan. The company will further integrate into the new pattern of national development, provide insurance protection, pursue high-quality development and forestall risks. First, we will strengthen Party building and play its leading role. The second is we will fulfill social responsibility and serve the real economy. The company will leverage the advantages of long-term life insurance funds to support the major national development. And we will push forward a personal old-age care industry, and we'll enhance the charity platform of the company. Thirdly, we will push forward life insurance business and accelerate the coordinated development. A high-quality development will be the [ core ], and the company will carry out the 1 plus 2 plus 1 strategy focusing on life insurance business, leveraging the synergy of assets and liabilities, improve our investment capacity and build a product and service platform and service model. And at the same time, we will enhance and innovate our product and industry deployment. Fourthly, we will strengthen technology support and better serve the customer. The company will enhance technology empowerment and data-driven capacity to support our own business and to optimize our operation so as to optimize our customers' demand and experience. Fifth, we will abide by laws and regulations and forestall risks. The company will implement regulatory requirements and -- to enhance our own awareness of the risk control and to optimize our risk control system and safeguard the bottom line. Next, I would like to introduce insurance business. In 2020, the company realized rapid GWP growth through both long-term and short-term insurance business. FYP from long-term insurance business reached CNY 39 billion, up 53.7% year-on-year, accounting for 24.5% of GWP. Its contribution to the GWP increased 6.1 percentage points year-on-year. Renewal premiums reached CNY 113 billion, up by 6.8% year-on-year, taking up 70.8% of the GWP, a solid foundation for rapid premiums growth. Premiums from short-term insurance business were CNY 7.5 billion, up by 8.8% year-on-year. GWP breakdown by channels. Individual insurance channel realized premiums of RMB 117.4 billion, up by 8.3% year-on-year, accounting for 73.6% of GWP. Bancassurance channel realized premiums of CNY 39.7 billion, up by 45.6% year-on-year, accounting for 24.9% of GWP. Group insurance channel realized premiums of RMB 2.4 billion, down by 0.5% year-on-year. In 2020, the individual insurance channel optimized product supply, strengthened online sales, realized premiums of RMB 117.4 billion, up by 8.3% year-on-year. FYP from long-term insurance, CNY 15.9 billion, up by 4.8% year-on-year. Renewal premiums, CNY 96.3 billion, up by 8.5% year-on-year. Premiums from short-term insurance business, CNY 5.2 billion, up 15% year-on-year. In 2020, the company improved agent recruitment criteria and launched the new basic law. At the end of 2020, agent headcounts hit record high, totaled 606,000, up by 19.5% year-on-year. The pandemic posed greater challenges to marketing and reduced active agent headcounts. The monthly average number of qualified agents was 128,000, down by 3.8% year-on-year. And the monthly average qualified rate was 23.8%, down by 9.2 percentage points year-on-year. In 2020, the bancassurance channel deepened cooperation with [ important ] partners, [ tapped ] customers' needs and improved product competitiveness. As a result, the bancassurance channel witnessed rapid growth. Premiums was CNY 39.7 billion, up 45.6% year-on-year. The FYRP from long-term insurance business, CNY 5.7 billion, up 36% year-on-year. Renewal premiums were CNY 13.6 billion (sic) [ CNY 16.6 billion ], down by 2.4% year-on-year. In terms of product structure, we have remained sound. FYP from long-term participating insurance was CNY 18 billion, up by 174.5% year-on-year, taking up 46% of FYP from long-term insurance. FYP from long-term health insurance reached CNY 10.4 billion, down 11.1% year-on-year, taking up 27% of FYP from long-term insurance. FYP from long-term traditional insurance, CNY 10.7 billion, up 48.4% year-on-year, taking up 27% of the FYP from long-term insurance. The company's business quality remained stable. 13-month persistency ratio was 89.8% (sic) [ 89.9% ], basically the same with that of 2019. And 25-month persistency ratio was 84.9%, decreasing by 1.3 percentage points year-on-year. The surrender rate dropped to 1.5% in 2020, down by 0.3 percentage points year-on-year. That's all for the insurance business. Now let's welcome Mr. Yang Zheng.

Thank you, Mr. Li. Next, I will introduce the financials and investment. In 2020, the total revenue totaled CNY 203 billion, up by 18.5% year-on-year. Net written premiums and policy fees were RMB 156 billion, up by 15.4%. The investment yield has increased by 29.5% to over CNY 46 billion. Net profit attributable to shareholders totaled CNY 14 billion, down by 1.8%. You can see here, in 2019, the company and the industry was benefited from the tax [ exempt ] policies, which [ caused ] a higher base for the growth, so contribute over CNY 18 billion for the profit. So that will pose pressure on the profit growth this year. The yield earning per share was CNY 4.58. For the total investment yield in 2020, the company sticked to the long-term and value investing. Well, under our strategic management strategy, we also conducted the [ tactical ] investment and realized a sound investment yield. Among those, the total investment assets totaled CNY 965 billion, up by 15%, which is in line with the growth of our premiums. The total investment yield is 5.5%, up by 0.6 pt. Net investment yield is 4.6%, down by 0.2 percentage point. For the investment portfolio, as at the end of 2020, the asset allocation is stable. 3 major categories like term deposit, the debt financial assets and equity investment are as follows. The term deposit accounted for 12.7% of the total asset, up by 5.1 percentage point. The debt financial assets accounted for 58.8%, down by 6.8 pt compared with the end of last year. For the equity financial assets, the total assets is [ CNY 206 billion ], accounting for 21.4% of total investment assets, up by 2.7 pt. And for our nonstandard asset, we can see in 2020, the nonstandard asset consider both the yield and risk control. We strictly controlled the newly asset, and the risks are under control. Nonstandard asset is a major subject of our allocation. Like we've introduced to you in previous years, nonstandard asset will [ align ] with the industry's development and the national development and it will be narrowed. This trend shows in this year, the total asset in nonstandard asset accounted for 24% of the total investments, down by 5.3 percentage point. Nonstandard debt investments were CNY 175 billion, down by 3 pt. And nonstandard equity investment were CNY 57.9 billion, up by 3 pt. Because we have fewer new nonstandard assets, so the quality is stable. [ 3 A-rated ] nonstandard assets accounted for 95.5% of the total asset. The risk is under control. For the solvency, at the end of 2020, the core solvency margin ratio is 268%, down by 15 pt. The comprehensive solvency margin ratio is 277%, done by 5.8 pt. By the end of last year, we said these 2 ratios were going on the same trend. In 2020, we've issued the capital supplement [ to amount ] of CNY 10 billion. Therefore, the core solvency margin ratio is higher than the core solvency margin ratio -- next, let's invite Mr. Gong Xingfeng to introduce the embedded value.

Thank you, Mr. Yang. Next, I will introduce the embedded value. By the end of 2020, the EV of the company continued to increase, increased by 17.3% compared with the end of last year, raising from CNY 205 billion to CNY 241 billion. The value of in-force business increased by 13.6% from CNY 82 billion to CNY 93 billion. Adjusted net worth increased by CNY 19.8 billion from -- 19.8% from CNY 120 billion (sic) [ CNY 122 billion ] to CNY 147 billion. Next, I will introduce the movement analysis of the EV. There we have a table to show the movement analysis of the EV and the contributors for the EV. We can see the main contributors to EV growth were NBV, expected return and our sound investment yield, which brought the economic experience variance. This contributed [ 4.5% ], 8.8% and 4.3% to EV growth, respectively. Next, I would like to introduce the NBV. In 2020, NBV of the company totaled CNY 9.2 billion, down by 6.1% year-on-year. The FYP-based NBV margin was 19.7%. APE-based NBV margin was 30.4%. That's all for the embedded value. Thank you. Thank you for your listening. Next, we will go to the Q&A session. [Operator Instructions] Next, let's welcome the questions. Thank you.

I'm Sun Ting from Haitong Securities. First, congrats to NCI for the good results owned in 2020 in terms of premiums and also NBV. I have 2 questions. The first one is about NBV. In 2020, the NBV is -- decrease is less than the peers. So is there any guidance for the NBV of 2021? And what's our perspective on its growth as well as the competitive advantage of our company compared to some middle and small-sized companies? And the second question is about the agent. We see that the total agent has increased a lot, but the quality has decreased. So what will be the company's measures to increase both the headcounts and also the quality of the team?

Okay. I will answer your first question. Thank you for Haitong Securities' attention to the company's premium growth and performance growth. Of course, this is a very hard-won result because of the COVID-19 in 2020. No matter, the management or the team and including all the staff of NCI, we have done a lot of efforts to win the outcome and it has laid a solid foundation for the development of 2021. We have more confidence in the development this year. At the same time, the second takeoff strategy of NCI has been conducted effectively. But we still have to say that in 2021, we have faced a lot of uncertainties and challenges in terms of development in 2021. So in this process, we have to meet the customers' demand of a better cost-effective product. And at the same time, they will have an expectation to their own wealth management. So we'll satisfy that demand, too. And on the other hand, we'll have to make a balance between the value and volume. So in general, we are facing a lot of challenges. Next year, in the process of the 2021's development, in premiums and NBV development, we have set targets, very challenging targets. In this process, we are being very proactive in the investment -- financial investment in standards of the agent and in training so as to fulfill our targets. In terms of NBV, I think the source for growth are diversified now. On the one hand, we are attaches great -- attaching great importance to the health insurance, a high-margin insurance. We are investing and [ posing ] our standards in health insurance to our agents so that it will have a sustainable and stable growth. And on the other hand, we will increase the sales of annuity insurance so as to keep a stable and sound growth. Especially in the bancassurance channel, in striking a balance with value and volume, it has contributed a lot. In 2021, in both annuities and health insurance, we have great confidence as we've seen in the news some of the Internet platform are issuing products and they are shifting their strategies. And some platforms have even closed. And on the other hand, some -- the authorities is [ posing ] an even more strict regulations on that. So in facing COVID-19, our customers are increasing their awareness of wealth management and health care. So in an old-age coming society, we believe that annuity and old-age care will be a very promising industry, and these 2 markets will have a lot of opportunities. So we believe that this year, all of these measures taken by NCI will be of good effect, and we will bring an even better result. Thank you. About your second question, some of our peers are now decreasing their price to compete with the big companies. It's very hard to answer. From the perspective of the customer, of course, they want a more cost-effective product. So it meets their own demand, and it is within their cost. But seen from the perspective of the company, we will have to bring more benefits and profits to our shareholders and to the whole market. As for our agents, they have to have an [ eligible ] income. So in this process, the company adheres to the development of a sound development. We will -- in customers' demands, we will have a more segmented industry. And for example, last year, we have issued new product in both old-age care and new industries. So a diversified competitive option and an innovative product system will bring more benefit to the customers, to the shareholders as well as to our employees. Thank you.

About the question in agents, as you have just mentioned, there are 2 aspects. The first one is about the agent headcounts and the quality of the team. I think the main reason is that the COVID-19 has shifted our way of sales and marketing. In the agent insurance channel, the traditional channel have been blocked because they cannot go out and have face-to-face meetings with the customers. Because of the COVID-19, it was getting very hard for our agents to meet their customers. And the second reason is that we have difficulty in managing our agents. In normal days, we have daily training and daily management of the activity ratio. But because of COVID-19, we don't have a very standard management in this aspect. And the third reason is that our training have [ left out ] because of the COVID-19. All of the 3 reasons have caused a decrease of quality in the team. To solve this problem in 2021, the development of our sales force, we'll increase its headcount by a small margin on the base of 600,000, and our focus will be on the enhancement of the quality. The measures is, first, we'll have to do the [ 4 ] marketing. The first one is marketing through policy. We have the basic law -- the new basic law that was issued last year, and we also have the allowance for the beginners. All of this will help us to build a 3-high team: high retention rates, high productivity and high quality. The high quality means, as I've mentioned last conference, we'll build a younger team so that the [ post-0 and post-19s ] will be one of our -- will be parts of our team. And the second one is that we will increase the activity ratio of our team. We will enhance the basic management, including the -- we will grasp each time line of our sales so as to increase the qualified rate. And the third one is to increase our marketing activity. It includes technology empowerment. In the end of 2020, we have established many new systems in technology empowerment and find new ways to make online customer service and online customer [ tenants ]. There are a lot of campaigns and activities to increase our communication with our customers and increase our ticket size. And the fourth one is that we'll have a responsibility in marketing. That is to say our agents will have to be responsible for the customers in both products and services. They will provide a protection covering the whole life of our customers, including the main insurance and riders. All of these measures taken will be and hopefully be effective to increase and enhance the quality of the agents. Thank you.

Now let's move to the next question.

I'm [ Sung Kwang Hong from Commercial Securities ]. First, I want to congratulate on your achievements, and the staff press has showed that. I have 2 questions. First is I want to ask Mr. Li Quan. Last year, you have the Corporate Day mentioned wealth management strategy, and you've told there are [ 3 ] stages. First is last year, and this is the second stage. And I want to know the progress in the wealth management strategy. That's the first question. The second question is about the [ actuary ], question for Mr. Gong. We see that the operating assumptions has changed, which has affected the EV. And I want to know what did you adjust and the impact?

Thank you, [ Mr. Sung ]. Last year in our Corporate Day, activity was mentioned about the wealth management strategy. Last year, the company has actively promoted the wealth management strategy, and it has embedded in our 1 plus 2 plus 1 strategy. We actively expanded the [ fund ] from external institutions. The third-party business increased fast. By the end of last year, we've received internal insurance fund of CNY 819 billion, up by 19.1%, and we received external insurance fund of CNY 196 billion. And it's a large increase because in 2019, we do not have external insurance fund [ invested ]. And we have over CNY 195 billion in 2020. And for the insurance asset management product portfolios, we have CNY 143 billion, up by [ 500% ]. And for the [ alternative ] insurance asset management fund, we have CNY 42 billion. The total asset under management exceeded CNY 1 trillion to CNY 1.2 trillion. I have mentioned in 2019 that we have a strategy. We hope to maintain the first [ tier ], which requires we -- the asset management exceeding CNY 1 trillion. The main partners are large banks and small- and medium-sized insurance companies like Industrial Bank of China, Commercial Bank of China (sic) [ Industrial and Commercial Bank of China ], Pudong Development Bank, Shanghai Bank, Everbright Bank, et cetera. And for the asset management portfolios, we have strengthened the building of our product system. It established a comprehensive product line, including the equity asset, fixed income asset and index products and FOF, et cetera. And for the second question, Mr. Gong will answer it.

Just now you've mentioned that in the movement of the EV analysis, there's changes of operating assumptions, which has an impact on the EV. The EV -- the changes has 2 aspects. First is you may know that the introduction of the new definition of critical illness has been introduced by the CBIRC. The Chinese Actuaries Association has introduced [ the new occurrence ] rate. From the table, we can see there are -- there have been 10 years since the last change. And the deterioration of the occurrence rate for critical illness [ has slowed ] the trend for NCI in 2020. While we make our calculation, we conduct the new definition of critical illness, which can better show the latest incidence rate for the critical illness. And the 2 tables, you can see, there is a key ages from the 20s to 60s. The occurrence rate and the incidence rate for the female has increased like over 200%, and the incidence rate for the male also increased. So the shift of the definition for critical illness and the incidence table has caused impact on our assumptions. And that's the main contributor for the operational assumption changes and other -- and changes -- the changes from other aspects like the surrender rate and et cetera, but the [ inflows ] is limited. Let's welcome the next question.

I'm from the [ 21 Economic News ]. I want to know a more macroeconomic question. The first one is about the pension. Insurance, as you've said in your open day, you have focused on that. And also now the authority has proposed that we'll have to build a [ third payer ] insurance protection. And under the concept, have a greater pension insurance and greater old-age care. And a lot of institutions is now increasing their efforts, including some investment institutions. People's focus has been shifted to financial institutions, except from insurance. So what will the company do to shift the focus to insurance itself? And the second question is about technology empowerment. As you've just mentioned, technology empowerment is one of your strategies. Many insurance companies are now increasing their market share and increasing their stock price in a more -- through the big data. And what will the company do? And what will be the measures to take in technology empowerment?

[Interpreted] Thank you for your question. About the first question, the pension insurance. We are very dedicated to develop the old-age care as well as the pension insurance, as you've just mentioned. In the 14th 5-year plan, the authority has posed about the old-age care question very clearly. And I believe that financial institutions, all of them will have the responsibility to shoulder. As you've just mentioned, some other financial institutions, they have their own advantages. But for insurance business, according to the experience of many developed countries, insurance plays a very big role in old-age care. So I will present Mr. Lui Yigong to you to answer this question.

[Interpreted] For NCI, the pension insurance as well as the old-age care industry, we [ attach as ] great importance to it. The current strategy includes 3 aspects. The first one is traditional life insurance, which is connected to pension insurance, including the long-term annuity it has a protection for the seniors. Under the strategy of both volume and volume growth. We have shifted our focus on that. And last year, we have a rapid growth of long-term annuity insurance. And the second part is that we are now participating in the national initiative of old-age care and pension insurance. As you've just mentioned, it is a greater market. Many financial institutions are taking a share. Currently, the authority and the regulatory administrations are now standardizing the concept of pension insurance and annuities. In this product, the company in designing we participated in the whole process of this project. And currently, we are one of the first batches in insurance companies to have pilot projects in Beijing and other cities. We will be dedicated in the development of this product. So as to develop a professional and very pure annuity products and push insurance products for our customers and make sure that our products' design is in line with the regulation. Of course, the [ pilot ] zones are not just about our profits. We'll have to lay a solid foundation for the second phase. And third parties that we focus a lot on the ecological system building in the old-age care, which is called the product class. And with earned fruit outcomes last year, in general, there are 3 communities, old-age care communities. The first one is in the downturn of Beijing, which is provided for those health seniors that have a high-end demand. In 2020, in -- because we have been under the shades of COVID-19 for almost half -- more than half a year, and we are now earning more income. And the second old-age care community is in Hainan provinces -- Hainan province. And it is also provided for this house seniors. And last year, we have upgraded it, and it is now in use. And the third program is in the suburban area of Beijing. It is of good process. And in the end of April this year, we'll open that community, and it will be in use in the end of this year. And also in the old-age care system, we are doing a lot of service and deployment in some very [ hot ] cities and areas, so that we'll have a more comprehensive deployment. That's all for this question. About your second question, in technology empowerment. As you may know, in this aspect, NCI lagged behind years before. But in 2020, we have gained a lot in technology empowerment. Firstly, in the new business operation system. We have pushed forward its development. The new [ core ] system of our business in 2020 have been deployed nationwide, and it has a good effect. It has been issued throughout the whole country in 2020 because of the pandemic. The technology empowerment has been pushed forward by the pandemic. So the company has made in every effort to optimize the customers' experience and to enhance effectiveness of the operation, and we have used the AI, the big data and some mainstream technology to increase our technology empowerment and to enhance our capacity of our online platform to empower our teams, our business, our customers and our operation and business. Last year, COVID-19 has blocked many traditional channels of our performance, but we still had a fruitful outcome. That's mainly contributed by the technology empowerment. Technology has striked (sic) [ struck ] a balance between the operation and the business development of the company. Even in the mid of COVID-19, we have a very comprehensive management and operation of the whole company, both our staff and the sales force, their activity were not impacted a lot by the COVID-19 because our online platform, we have webcast platforms to have our teams training and some campaigning, sales campaigning. And that is in line with the pandemic control as well as our development models. Apart from the system support, we also have an insurance donation, online insurance donation for our customers, so that we'll have more protection to our customers even in the mid of COVID-19. And also, we are introducing a new mobile platform for our agents so that our agent will have more communications with the customers. And the second is that we have introduced a cloud [ wing ] program partnering with some very famous peak Internet companies so that our middle platform, the operation platform will be more effective, and it will be in use in the end of 2021. And we hope that our customer experience will be lifted. And the third is that we have had a more comprehensive platform for the claim settlements, the operation and the services for our customers. And we have the running NCI sales campaign, so as to connect our agents and our customers. And also our WeChat platform has increased their functions. And the fifth is that our new sales system and our new [ core ] system has been have been conducted in 80 -- more than 28 branches. So all of these technology empowerment measures have been conducted in a very effective way. And technologies, such as OCR and AI have been put into a more effective use in our business development and operation. That's all the things that we have done in technology empowerment in 2020. On the base of 1 plus 2 plus 1 strategy as well as a [ core ] of technology empowerment. In the future, I believe that we will have a more dynamic business and a smarter NCI. We will have the technology empowerment to support the main business and an online business as well as a more smart risk control platform, so as to push forward the whole development of the insurance business. And I think both the front, the middle and the rear platform will be of good development. That's the answer for your second question in technology empowerment.

[Interpreted] [indiscernible] from Daiwa. Two questions. First is about investment. Just now you've mentioned you have glass opportunities in the market and have sand yield, just as Mr. Yandu have said. Because of the changes in the investment market, the proportion of net in the asset will decrease. National assets in the history of NCI is at advantage point. And how do you comment on this trend? And if you do not have enough [ investment ] asset, how will ensure the stable and sound investment yield? The second question is about -- is that as a leading company in the insurance industry, we have carbon neutrality and carbon peak emission project and as a large company, what's your planned measures in this regard?

[Interpreted] Thank you for your question. The investment asset we've accumulated in NCI, has our advantage and features it has a stable contributor for our investment yield. And because of the external financial environment and the changes of the economic situation, we can see the existing nets in ] the assets are decreasing. Now we have [ CNY 230 billion invested assets ] accounting for like 1/4 of the total asset. It's lagged behind for the peak, which is 1/3 of the total [ investment ] asset. This is in line with the national financial strategy and arrangement [ net ] on the asset is an [ answer to compare ] was to standardize it. In the past, because of the financial product is not the standard. So there are a lot of [ national ] assets in the market and available for the [ shore stream vest, ] which has a high-yield and controllable risks and eligible for the insurance fund. So there were opportunities, and we've grasped these opportunities. Now we have said, the opportunities is -- opportunities are decreasing. How to deal with that now with the country's further reform and innovation in financial sectors. The [ net on the ] asset will have less support. And it will change to the standard asset. So in this regard, the shift as a channel and the trend so in this regard, opportunities for [ net on the ] asset are decreasing, especially since last year. The economic have great pressure because of the covenanting in a short time, the covenant, the [ net on the ] asset available is decreasing. Next, you can see the [ net on the ] asset are come to maturity. And we have added some new assets. So the reduction of the proportion is slowing, but that's the trend. For the long-term asset allocation of the insurance fund, we will follow the national strategy and the reform of financial sectors. We will use the advantage that will [ accumulate ] in both assets, in standard and [ in national ] asset, but we'll deploy the allocation and we have our sensitivity about the market and the sensitivity about the high-quality resources and of our capacity in our implementation. So we will follow the asset allocation strategy while ensuring the investment yield will control risks to make asset allocation. And this is our strategy and the strategy also have the yield in our investment yield. Mr. Zheng will add that as a life insurance company for the carbon neutrality. NCI has our unique advantage with the platform, including the insurance products and service. First of all, we will actively participate in the carbon neutrality strategy, like the investment in ESG which is a new strategy and new pattern of the country. We will strive to contribute for this regard. As a state-owned enterprise and as a large insurer, we will integrate our strategy into the national strategy. Firstly, the development model of our company and the sales model of our company. Like I've mentioned, including the insurance product, the service and the charity activities we will actively reduce the carbon emission and pay close attention to the environment. And we've conducted the caring for sanitation workers activity as a movement in the ESG investment and for the carbon neutrality. And on the other hand, for the assessment of our company, we also include that we've had the assessment into our annual plan, we will follow the national strategy and taking into consider the requirement of the ESG environment and add the corporate governance and the ESG investment into our assessment indicators. We hope through these activities, we can make headways in this regard and to strive for high-quality growth in terms of the ESG. We hope to contribute to the environment and the other hand, for the asset management company, how to use the insurance fund with -- add the subjects and criteria, including the ESG investment. The direction of our investment will go more to the industries and subjects, which are more environmental-friendly and surer social responsibility. So this will be a target and subject for our investment in other hand, and we will consider to introduce the ESG asset management product and insurance for that, we'll also take into consider of that. Next question.

[Interpreted] I'm Xue Yuan from CICC. I have 2 questions. The first one is because of the COVID-19, a long-term traditional insurance demand has decreased, and it has caused a decreased sales of this product. And since now we have had a normal control of the COVID-19 and what will be the trend for the critical [ EONS ] insurance compared to last year? And the second question is about the NBV margin. Last year, the NBV margin has decreased, but it has decreased -- it has increased in the second half of last year. So I want to know what will be the reason for the increase of the NBV margin in the latter half?

[Interpreted] I'm Li Quan. I will answer your first question about the demand in critical illness insurance. As mentioned last year, because of COVID-19, complicated products, such as critical illness insurance, the sales have been hindered because of the COVID-19 because it requires face-to-face communication between the agents and their customers. So these relatively complex products, its sales volume has decreased. So the whole market has also taking battering. So in 2021, in critical illness insurance sales. We hope that it will have a good outcome. Because, firstly, in the post COVID-19 era, we are now having a very effective control of the pandemic. So the management of our sales team is going back to normal now. And the second is that our management to our sales force is now enhanced. And the third reason is we are now overcoming the difficulties, and our customers are increasing their demand to critical illness insurance because there are a lot of concern because of the pandemic and the awareness of their health has been enhanced. So from our sales statistics, we can see that our customers' awareness to critical illness insurance and their own protection have increased.

[Interpreted] I will answer your second question. Looking back to 2020, the NBV has decreased by a single-digit in 2020. As I've just mentioned, it's a hard won result. An important factor is that in the second half, we have filled a lot of pressure. Also in the results announcement, we've said in the interim results that our NBV margin will decrease by double digit. A lot of analysts and investors are very concerned about that because our premiums as well as agent headcounts have increased, good, in the latter half of 2020. But how to realize our NBV margin increase, it's a very big challenge. So in this regard, for our company, we are very aware of this. On the one hand, we have to increase the volume. On the other hand, we have to strike a balance between volume and value. So in the second half, we have taken effective measures. Firstly, we are very aware of this problem. And as we discussed last year, should we decrease our standards, will there be adjustment to our assumptions and our standards? There are a lot of discussions, but we don't adjust all of the standards. So we were still very firm in fulfilling the target of value. So a lot of measures were taken. In August, we started to plan for the online platform sales, as you remember the [ Zhuo Yue ] insurance product have been issued and marketed in the second half. A lot of our management are also doing webcast to introduce our products. A lot of sales and marketing campaigns have helped us in the sales in critical illness insurance as well as other high-value products. At the same time, we also resorted to a high-value month that is September and also October. And we are shifting our product strategies as well as our product portfolio to the healthcare free and multiple protection, and we upgraded these 2 products. And we launched so as to tap into the customers' needs. As Mr. Li just said, in the '20 -- in the recruitment, in the management of our product and our customer service, we have taken a series of measures. All of them are of good effects. But, of course, as you've just mentioned, the competition in this whole market is very fierce. A lot of companies are -- decreased their prices to compete with the big companies, but for our company because we have to shoulder the responsibility of a stable economy, we have more operation costs and more investment to our business. All of this will have an active impact to the NBV margin. To solve these problems, the company will still focus on value, and it is a very important standard for the company's development. As we've done in the latter half of 2020, we will have the deep awareness of the problem and keep a stable and sound development of NBV. Now let's move to the next question.

[Interpreted] [ Zhou ] I have 2 questions. First is about the asset in 2020. If not is that total investment yield is sound, especially, you can see you've cashed out the gains and you have a high base in 2020. And I want to know the performance in the investment for 2021. The second is about the product structure. We've noticed that in 2020, the FYP from [ life ] insurance has a lower percentage from the health insurance compared with previous years to about 25%. And I want to know your expectations about the proportion from health insurance product.

[Interpreted] Mr. Yang Zheng will answer the first question about investment.

As a life insurance company, you may know that the yearly investment yield has 2 parts. First is the dividend income. The second is interest income. As was mentioned before, the interest income have maintained stable. And we have a steady increase. And at the same time, they asset quality is high, which has laid aside the foundation for the investment yield of our company in this year and for the next few years. And for the total investment yield, and that will be influenced by the fluctuation in the capital market, including the fluctuation of the [ Star Press ] in 2020. Despite of the pandemic the large capitalization, the capital market has a relatively sound yield for the trading asset. NCI in this process has actively grasped the market opportunities and yielded sound income. So this has contributed to the total investment yield and profit. And for 2021 until now, the stock market for the first few months has exceeded and beyond people's expectation. I will now elaborate more. And in this regard, we will also stick to our main contributor for the asset yield, grasp market opportunities as the life insurance company with large asset, we avoid short-term investment. We will concentrate our investment in the long-term asset investment. Short-term trading has large risks. We will follow a long-term and stable investment focused on the fixed income asset. I cannot tell you the exact number which this caused enough information about our investment asset allocation. And the investment duration is long. You can have consumption by that, we will maintain a stable investment yield. Mr. Quan will answer the second question.

[Interpreted] If look through the annual report of our company, to be frank, the proportion from health insurance is secrecy at what proportion is an appropriate one. What target should we make in the next few years? These are good questions and was our thinking, and we can we can see that for the strategy of our company we've made clear that we will strive for the growth of both value and volume. In this process, we can see the various aspects, not just one product and one aspect for demand. We will strike a balance between various aspects, the proportion of one product will be included in our strategy. It's a mobile process. The country has proposed that we are undergone the changes -- we're undergoing the changes at an [ unseen handy ] years, the environment we've missed we'll face. The new development pattern will influence our development strategy and development environment. We should respond quickly to the external changes. In 2020 and 2019, NCI has yielded a sound result. The performance we've achieved is because we respond quickly to the changes for the development of health insurance. We think it depends on the several aspects. First is the macroeconomic environment. We've made analysis and researches in the aging society, a trend for us is -- has brought challenges to us not only the health care, but also aged care. The country has made an adjustment and arrangement on this regard. As a leading insurance company and a financial company, we should respond and chat -- adapt to the environment of the country and the national strategy. The second is we should look into the overall development pattern of the industry. In the past 2 years, the development pattern has changed. It's not a small one, it's a large change. Individual insurance business has encountered challenges. Online business, the technology empowerment has changed. So the growth model will affect our product strategy. Just now we've mentioned in the second half last year, we promoted the [ Zhuo Yue ] product online and yielded sound result. But now we haven't adopted the second attempt because the sales of health insurance is complex and hard. It including many process. Online sales is not easy. But the sales of the newer insurance is more easier and more popular. So in this regard, the development pattern should take into consider the online sales, and we should not just focus on the individual insurance channel. So this has changed our distributor channels and sales models. The third is about the market. We will focus on one type of product that is not the case that the product we recognize will be recognized by the customers. So we should adjust our policies in the sales of -- in sales. And last area, we should focus on the customers' demand, which is the main driver for the growth of the company. So in this regard, we should take into consider those changes. Like in the Bancassurance channel in -- was in the past, we've tightened the sales in these channels, that we can see there are demand existing as channels. So that has changed our positioning of Bancassurance channel. So to conclude, value is the focus of our company. And also, we attach importance to the volume. The products that provide volume and value will be our concern, focusing on the national strategy and extra environment, we will respond to the changes, and we will strike a balance between our product structure and to ensure a steady and more controllable growth, and to ensure a long-term and sustainable growth for -- and benefit the company and investors and the customers. These are my answers. Maybe I took too much time for this question. Due to time limits we will not take more questions because previously, we've -- later, we have had an announcement. And in line with CBIRC's requirements, we should have more opportunities to our small investors. So after an announcement, we've received some questions through the IR e-mail box. So all the small investors are -- they are concerned about our company's development. So I would like to express my gratitude to all the investors that are participating in this results announcement. Thank you thank you for your attention, and thank you for your support for the development of the company. But of course, I cannot answer your question one by one, because we have a webcast that can answer your question. And I have also chosen 2 questions that is of the most concern of all the investors. The first question is what will be the management and the measure taken by the -- to manage the stock price of the company, will there be a repurchase trend? The company will push forward a value and value great -- growth, driving by both asset and liability side so as to ensure a high-quality development of the life insurance business covering the whole life of the customers. And also provide a good experience for our customers. And at the same time, we'll provide a portfolio of wealth management products for our customers to meet their diversified needs. Currently, information from the shareholders and the Board is that we don't have the repurchase plan. The second question is, is your company considering, increase the dividend ratio to 40%? About this question, we currently don't have the plan to adjust our dividend plan. In 2016, we have increased the dividend ratio to 30%. We believe that this kind of level is in line with the operation level and the authorities' requirements, as well as the management of the solvency and the assumptions of the company. So we currently don't have the plan. If we have the plan in the future, we will disclose that as soon as possible. Let's end for the 2020 annual results announcement. Thank you for all the questions. If you have any other questions, please contact us. Now that's the end for the 2020 annual results announcement. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]