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

Ladies and gentlemen, good afternoon. Welcome to New China Life 2021 annual results announcement. Today, we have senior management at hand. They are CEO and President, Li Quan; Vice President, Zhang Hong; Vice President and CFO, Yang Zheng; Vice President, Li Yuan; Vice President, Chief Actuary and Board Secretary, Mr. Gong Xingfeng; Vice President, Yu Zhigang; Mr. Gong Xingfeng is online. We also invite 4 independent directors to attend. They are Mr. Mr. Cheng Lie, Mr. Xin Geng Jian and Mr. Ma Yiu Tim. Welcome them. Today, we have 2 parts. The first is the introduction of 2021 annual results by the senior management. The second is the Q&A session. We offer simultaneous interpretation for investors, analysts and friends from media. [Operator Instructions] This is the business performance introduction. Mr Li Quan will introduce the 2021 business performance and future prospects. Mr. Yang Zheng introduce financials and investments. Mr. Gong Xingfeng introduce embedded value. Let's welcome Mr. Li Quan.

Ladies and gentlemen, good afternoon. Welcome to New China Life's 2021 annual results announcement. First, I would like to introduce the overview. In 2021, the company achieved steady progress in operations. Facing severe external situations the company, by adhering to the strategy of assets, liabilities dual engine driving growth, total assets exceeded CNY 1 trillion and operating revenue and profits steadily increased. GWP amounting to CNY 163 billion, up by 2.5% year-on-year. FYRP from the long-term insurance business amounted to CNY 21.8 billion, up by 4%. The core business increased. Embedded value reached CNY 258.8 billion, up by 7.6% year-over-year compared to the end of 2020. Total assets amounted to CNY 1.13 trillion, up by 12.3% compared to the end 2020. Net profit attributed to shareholders amounting to CNY 14.9 billion, up by 4.6% year-on-year. The total investment yield rate 5.9%, up by 0.4 percentage points. In 2021, New China Life developed life insurance business, actively served the national strategy social responsibility and practiced sustainable development. In serving national strategy, the company invested over CNY 380 billion. The sum assured was over CNY 1.3 trillion. The company carried out Healthy China strategy. The policy-oriented insurance business covered about 9.4 million customers in the provinces with claim payments of CNY 179 million. The company supported the building of commercial pension insurance system, actively put in place a pilot program for inclusive commercial pension insurance, launched an exclusive critical illness product for Greater Bay area to support the regional economic developments. The company investment in innovative financial products to serve the real economy. In social responsibility, the company helped Guizhou shipping and Inner Mongolia to support rural revitalization and invested a total of CNY 9.7 million. The company continued to carry out the sanitation workers projects. Since the launch of the project until the end of 2021, the company has donated sum assured of over CNY 300 billion with a compensation amount of over CNY 25 million. The company supported the disaster relief in Henan. The company donated CNY 10 million to support flood relief and donated insurance to disaster relief workers with a cumulative sum assured of more than CNY 105 million. In order to fight against COVID-19, the company provided pandemic prevention insurance to frontline medical staff, policemen, community workers with a cumulative sum assured of over CNY 458 billion. The company always adheres to low-carbon and environmental-friendly operation, actively responds to climate change, promotes the construction of ecological civilization. Empowered by technology, the company carried out various measures for energy conservation and emission reduction, and it creates value for shareholders, customers, employees, communities and partners. Looking forward to 2022. Under the guidance of regulatory policies, life insurance, we'll pay more attention to participating in social governance and giving play to its protection function. Digital transformation is inevitable. Industrial revolution requires supply be more adaptable and flexible to demand changes, shifting from volume oriented to both value and volume oriented, from market leading to both marketing and service leading and from agents-driven to both agent and technology-driven growth. During the 14th 5-year plan, the company will improve its growth driver, promote the overall strategy with the life insurance as the core wealth management, senior care and old-age health care support and technology empowering growth. The company will focus on life insurance, offer excellent service, excellent growth and excellent management to achieve the second take-off. In terms of business growth, the company will highlight both business value and volume, strengthen value management while maintaining steady volume growth, focusing on regular premium business to consolidate the foundation for long-term developments. The company works hard to improve its basic management, strengthen business performance oriented, accelerate marketing system reform, further strengthen product innovation and improved team quality, business quality, production efficiency, practically strengthen risk management and prevention. Next, I would like to introduce insurance business. In 2021, although the growth of gross written premiums was under pressure, the company realized GWP of CNY 163 billion with a growth rate of 2.5% year-on-year. FYP from long-term insurance reached CNY 40 billion, up by 5.5% year-on-year, accounting for 25% of GWP. Renewal premiums reached CNY 116 billion, up by 3.5%, taking up 71.5% of GWP. Premiums from short-term insurance business amounted to CNY 5.6 billion, down by 25% year-on-year. GWP breakdown by channels. Individual insurance channel realized CNY 119 billion, up by 2.1%. Bancassurance realized premiums of over CNY 40 billion, increasing by 2.5%, accounting for 24.9% of GWP. Group insurance realized premiums of CNY 2.9 billion, up by 21.7% year-on-year. In terms of individual insurance channel, individual insurance channel made a positive response to external changes, pushed forward transformation development, met customers' needs and balanced product structure. FYRP from long-term insurance amounted to CNY 14.6 billion, down by 4.5% year-on-year. Renewable premiums amounted to CNY 100 billion, up by 5.2% year-on-year. In terms of sales team, in 2021, the company continued to clean agent head counts. The agent head count reached 389,000, down by 35.8%. Monthly average number of qualified agents was 91,000, reduced by 28.9%. Monthly average qualified rate was 19.1%. The monthly average comprehensive productivity capital was 2,700, growing by 2 point -- 4.1% year-on-year. In 2021, Bancassurance channel deepened cooperation with important partners, optimized products and service offering to grow regular premium products. FYRP from long-term insurance amounted to CNY 7.2 billion, up by 26%. Renewal premiums totaled CNY 15.5 billion, down by 6.8% year-on-year. The company met the customers' diversifying demand, FYP from long-term traditional insurance amounted to CNY 14 billion, increasing by 33.6%. FYP from long-term participating insurance amounted to CNY 18 billion, increasing by 1.6% year-on-year. Due to sluggish health insurance business and a cleaning of agent head count, FYP from long-term health insurance reached CNY 8.4 billion, decreasing by 18.8% year-on-year. For business quality, the 13-month and the 25-month persistency ratios of individual life insurers were 83.7% and 83.8%, down by 6.2 percentage points and 1.1 percentage points. The surrender rate was 2%, increasing by 0.5%. That's all for the business -- insurance business. Now let's welcome Mr. Yang Zheng to introduce financials.

Thank you, Mr. Li Quan. Next, I'd like to introduce the financials and investment of NCI. In 2021, the virtue of the increase of the investment yield and stable increase of the insurance business, the total revenue of the company rosed by 7.9% to CNY 220 billion. At the same time, for the expenses, you can see that the commission and brokerage expenses decreased 18.1% and administrative expenses is flat, which can show that the disposable resources along with the income and net profit totaled CNY 14.9 billion, up by 4.6%, and the basic earnings per share is CNY 4.79. And as for the investment, the total investment asset of the company totaled CNY 1.08 trillion. That's the first time that the total investment asset of the company surpassing CNY 1 trillion, and last year is CNY 900 billion. And the company sticked to long-term and value investing and adopt a flexible on the investment taxes under the strategic guidance seek opportunities in the market and control investment risks and followed our discipline. And sound investment yield was achieved last year. And the total investment yield was 5.9%, up by 0.4 pt and net investment yield was 4.3%, down by 0.3 percentage point. And the net investment yield is knowing the income of the dividend decreased to 4.3%, which is in line with the general external environment and in line with the expectations. And next, let's go to the investment portfolios of NCI. By the end of 2021, the investment portfolio remains stable. The term deposit increased evidently, up by 2.9 pt, accounting for 15.6% of the total assets. The equity financial assets accounting -- the debt financial assets accounting for 53.3%, down by 5.5 pt and equity financial assets accounts for 23.8%, up by 2.2 -- 2.4 pt. As for the nonstandard assets, in the past several years, the company has disclosed the nonstandard assets. And we can see that the nonstandard asset is in line with what we have disclosed. By the end of last year, the nonstandard asset has continuously decreasing percentage to 20.5%. And also, the credit is stable and the risks are within control. As for the solvency, by end of 2021, the core solvency margin ratio was 343%, down by about 25 pt. And comprehensive solvency margin ratio was 352%, down by about 26 pt. This is mainly because the increase of the minimum -- capital. Next, let's invite Mr. Gong Xingfeng to introduce the embedded value. Thank you.

Thank you, Mr. Yang. Next, I'd like to introduce the embedded value of the company. The end of 2021, the EV of the company constantly improved, increased by 7.6%, up from CNY 240 billion to CNY 258 billion, of which value of in-force business rose by 2.7% to CNY 95.8 billion, and adjusted net was grown by 10.7% to CNY 163 billion. In 2021, the major contributors to EV were NBV expected return which contributed 2.5% and 8% to EV growth yield respectively. In 2021, the NBV of the company was CNY 2.9 billion, down by 34.9%. FYP-based VNB margin was 12.9%. APE-based VNB margin was 20.7%. And that's all for the embedded value. Thank you.

Thank you for the introduction. Next is the Q&A session. [Operator Instructions] Let's welcome the first question.

[Operator Instructions] The first question from [ CSC ].

I'm [ Li Xing ] from [ CSC ]. I have 2 questions. The first is the company's strategy. The investment income outachieved the peers. In 2022, the company grew Bancassurance channel. The Bancassurance channel contributed a little to EV and NBV. We see the proportion of Bancassurance channel is higher. Bancassurance channel contributed to assets. So the Bancassurance channel may bring pressure in the future developments of the company. So what's the future strategy of the company? The second question is product. In 2021, the NBV see reduction. The NBV margin also reduced. Is that because of the worsening critical illness or surrender rates? So does that affect the NBV?

The first is for Chief Financial Officer, Mr. Yang Zheng.

Thank you for your questions. In fact, you have answered your questions and your suggestions. The company according to the markets and macroeconomic situations will adjust its business strategy. And in terms of Bancassurance channel and the individual insurance channel, the company as a traditional life insurance company, the company focused on the value of individual insurance channel and its contribution to the company's growth. The Bancassurance channel realized positive growth in recent 2 years. Bancassurance channel bring investment pressure of -- we can see that. But the company considers the duration of products under the cost of assets, also consider the asset liability duration. This contributed to the increase of total assets and a little contributed to the growth of value. The company considers all of the factors mentioned above. Now the investment arrangement can guarantee -- the overall value of Bancassurance is higher than expectation. So we will adjust our business strategy, considering the actuarial situations.

Mr. Yang's opinion represents all of us. I have one opinion. From 2019, the company focus on Bancassurance channel from long-term strategic perspective. We strengthened cooperation with banks. In particular, since the outbreak of COVID-19, the company and the insurance industry has met difficulties. The company considers the future developments and strengthened the management of Bancassurance channel. We also emphasize our individual insurance channel. But because of the COVID-19, we will continue to put resources and improve efficiency in Bancassurance channel to contribute to the long-term development of the company.

The second question is for Mr. Gong Xingfeng.

Value decreased a lot in 2021 because of many reasons. The first is the product structure, the marketing and the worsening of the critical illness. There are many factors, many reasons for the reduction of value. The market paid much attention to the value. And we can see many enterprises have decrease value, including our peers. The whole life insurance industry has met difficulties, including the marketing of high-value products under the sales team. Mr. Li Quan said, we emphasize on core channels, how to improve the value. From my perspective, we have to consider this question. If you sell short-term insurance products, there is low value. But for the company, we see the overall steady value improvement. The company will take measures to guarantee the overall value. The first is to dig out the customers' demands and offer diversified products. There is much room for life insurance industry even though there are difficulties. Because of COVID-19, people's life and production saw difficulties, especially for the ordinary people. But in future, the wealth management and the life insurance industry, including the penetration and the density of life insurance, so the diversified product strategy is helpful to improve value. The second is the product, what's the next growth room in the future? The company focused on 2 thing, health care and senior care, at the same time, we improve our services through technology empowerment. We hope this can innovate product design to guarantee the high-value products, including critical illness, long-term saving and the long-term senior care products. The third is the product management. We will manage risks. The compensation for some products is increasing. This will push the company to improve the single product's profit and value. The fourth is the reform of sales team, and that require us to improve team quality, high persistency. And that will improve the value of the company. So we will see challenges in terms of products. But I think the most important thing is to transform products. Transform of product will help us improve the value. That's all. Thank you.

Let's welcome the next question. Next question comes from the China Merchants Securities.

I'm [indiscernible]. I have 2 questions. First is about the distribution channel. Second is about solvency. We see that the individual insurance channel just now you've mentioned -- just now we've talked about a lot about Bancassurance channel and individual insurance channel. In 2019 and 2020 has seen rapid growth about the agents head count. But in 2021, we can see there's a decrease of agent head counts. And now the total agent is about 390,000. And this is above the level in 2016 and 2017. And the peer company has similar head count about the same level in 2016 or 2017. And I want to know your expectation about total agent head count in the future and your -- will you further clean the agent head counts? The second is about the solvency margin ratio. And first, we can see both comprehensive and core sales margin ratio decreased a lot. Just you mentioned that maybe because of the new business. And we want to know specific reasons. And could you further elaborate? The second is, in the first quarter, you disclosed the NBV in the first quarter, and I want to know the impact of these 2 on the company.

First, let's have Mr. Li Quan to answer the first question.

Thank you for your question. Now the difficulties facing life insurance channel is evident since 2020. The individual insurance channel saw great pressure because of the pandemic Since 2021, we can see the COVID-19 continue to spread and which has negative impact on the marketing of the sales. So that's the first reason. Secondly, the individual insurance channel in the past 30 years has accumulated some problems, and those are going evident. And in the previous announcement, we've mentioned 4 mismatches, and those mismatches are even more evident. And thirdly is that we have the pressure from the impact of changing regulations. The regulation is increasingly more strict. And those matters are required to implement and including that the sale of insurance policies were not included in the assessment and incentive plans. And also there will be a video and audio taking in the sales process. So those have the impact on the sales of the company. And also, NCI as a state-owned enterprises, we need to follow the high-quality growth model and which means we should pay attention to the value growth. And secondly, we have targeted financial investment. And thirdly, the company has paid attention to high-quality growth requirement, and we need to clean all the fake numbers. And so in 2021, there are great pressures facing the company. And in -- just now you've mentioned about the policies and quantities of the team growth. And just now, we've mentioned that there's great potential for future growth. But how to explore that, we've made a lot of discussion and the 14th 5-year plan and our strategy emphasize that we need to follow the law and stress the innovation. And following along is that we need to return to the assets of the insurance and focusing on the basic management and strengthen the capability. And we need to secure the true premiums, the true agent head counts and to ensure the true -- and the premiums [ and the reason ]. The second is when you focus on professionalism, which means we will further strengthen our 4 promoting -- will improve the agent quality with our systems. We will consolidate the team. And we put the professional, young, urban agent. The second is we will further strengthen the service. The third is we will improve the policies per capita with the sales policy. The third is to improve the premiums per capita. And through those measures, we have to improve the agent quality and training through our above measures. And also, we'll emphasize the innovation. The 4 mismatches needs to be soft. And when you innovate our sales systems and marketing models and how to find new ways, we will create a new customer acquiring models and build a new sales model and marketing model and service model as well as management model. So those 4 count as innovations, including the service, the products and the management and products will be included in our innovation measures, and we'll strive replace the old models. And just now you've mentioned the difficulties facing the team building. And I want to further elaborate that the individual insurance channel accounting for over 97% of the value of the company and the premiums accounting for 73% of this value. And innovation needs time. We have over -- we have about 400,000 agents in the individual insurance channel. So we need to reform our team to create a more qualified sales teams. And in the second quarter, when we introduced the qualified team plan, we hope to transform the old team and increase the number of the high-performance agents. We hope to recruit the qualified agents. The second, we hope to have the sound training and have quality training. The training course for the new agents and for the performing agents have certain criteria, and agents can only sell products after they have met the criteria. And now we have to clean and coordinate and integrate the existing team and integrate the resources to support the team growth. The fourth is we hope to strengthen management of the management -- strict management of the new agents. This fifth is we hope to upgrade our technology and to support the sales activity and customer [ exploring ]. And last is we will introduce the appropriate policies to help the reform of the existing team. And the second point is we hope to innovate the new team. In the 14th 5-year plan, we also have elaborated this. And specifically, we hope to create a new atmosphere of marketing and use technology and service to empower the team and to cultivate the customers through online tools. And this new team will be a new one with the new management pattern. So the sales stream will include both the public areas and also private customers. And we hope to create a closed circle for the customer service. And for individual insurance channel, we have made specific adjustments, and we started the plan for creating a new team and reform the old team. So we hope to create and build a high-quality team. Thank you.

Gong Xingfeng will answer the second question.

I see the decrease of the solvency margin ratios. We have seen the numbers that there's a large decrease, and this is not only because the increase of the actual capital is higher than that of the minimum capital. So there is a decrease of the solvency margin ratios. Mr. Yang Zheng has further elaborated that. And there are 3 aspects about the minimum capital. There are 3 aspects. The first is the market. And second is the insurance business. The third is credit risk. And the credit risk account for less than 10%. And the previous 2 factors contribute more. And after we evaluate 2 factors, we can see that the market with the insurance business has larger requirement for the minimum capital. And the market increase faster and which includes the interest risks. And that's the core reason. And there's a decrease trend of the interest rate curve. And we have a large investment assets. So that's the major reason. The second is insurance risks. In 2021, they just now have mentioned about the insurance structure. And for the FYP, we can see that the Bancassurance channel has grow faster and which resulting in adjustment in adjustment in our product mix. And the critical illness has a lower percentage. So the business risk comes this regard. For the solvency, for the C-ROSS 2, we will disclose the NBV under the C-ROSS 2. The company is testing this impact. And we wish to emphasize more about the insurance and to present -- the company support this policy [indiscernible] costs. And the solvency margin ratio will decrease regarding the -- and -- but the solvency margin ratio will be higher than the regulatory requirement. One of those, the cost solvency margin ratio should have a larger decrease. And that's because the success of the company will be amortized based on the term of the existing policies. So this will have a larger impact on the core capital, which will result in a decrease of the core solvency margin ratio and have less impact on the comprehensive solvency ratio. The C-ROSS 2 will not only impact the solvency margin ratio, it also strengthen the company's management on the cash requirement, and therefore, increase the company's -- the capital. The second is they will need to improve the investment and the management capability of the company. And we need to better embody those risks in the C-ROSS 2. And there's a lot of guidance in the C-ROSS 2 regulations. And there are a lot of requirement on the penetration of the capital. So the company will be more prudent in managing our assets and to meet the requirement and criteria of the asset allocation. And the first is we will improve the risk management abilities. The C-ROSS 2 have a new criteria and standard for the risk factors. And the company will strengthen the management of the risks and to increase our capabilities so as to improve our capability in taking our capital against the risks.

Let's see the next question. Next question is from [indiscernible] from China Securities Journal.

I have 2 questions. The first is the wealth management strategy. The company unveiled the wealth management strategy in 2019. You have 3 steps. The first is the position of wealth management and the structural improvements of wealth management. So what's the progress now? The second is the life insurance asset management company can and coordinate with each other. The second question is about the investment. We can see that total investment yield was 5.9% last year. In the first quarter of this year, the capital markets volatile. So what's the trend of capital markets this year and the asset impairment losses?

Thank you. I will answer your 2 questions. First, New China Life, including headquarters and asset management company carried out the wealth management strategy. In 2021, we achieved rapid growth in the results. In particular, the third-party business saw a rapid growth, including the quality and the quantity of third-party business. You must be familiar with this. The third-party business increased rapidly for New China Life. In terms of organizational structure, we established the third-party business departments, including equity, fixed income business. Life insurance are good at fixed income business, so we attracted a lot of institutional investors. The size was CNY 264 billion and over 100 customers. The products have been improved. In 2021, the company developed 47 products. By the end of 2021, we will have 100 products. In terms of different risks and different returns, we have special product. Funds investment is a choice for a life insurance company. So we have professional staff, professional managers. We have wealth management plan in 14th 5-year plan. We will build core competitive investment capabilities. Because investment management capability is the most important. For New China Life, we are sellers and buyers in terms of wealth management. So we will take advantage of this strength and manage our risks and treat all customers and investors equally. To develop the wealth management, we emphasize on absolute return. We stay committed to long-term, value-oriented investments. In terms of coordination, wealth management will support the main life insurance business. So our strategy, asset, liability dual engine driving both volume and value growth, that is to help grow the main life insurance business. That investments improve -- supports the life insurance business and meet customers' diversified demand in wealth management. During the 14th 5-year plan, we will cultivate wealth management and take advantage of the strength of asset, liability and explore the demand in old-age care, health care and offer the customized products for high net worth customers. We will serve the national strategy and deal with the aging population of China's society. We launched the exclusive pension insurance product. We will make as a management stronger and bigger. Now the exclusive pension insurance product got off to a good start, and that met our initial expectation. During the 14th 5-year plan, our target for wealth management is the proportion of third-party business accounted for over 20% for total assets on the management of asset management company. New China Life is a national state-owned company. We will improve our political position to serve national development of the real economy in support to the regional economic development. And the universal benefited finance under the Belt and Road initiative, we will continue to serve the real economy and contribute our energy. You mentioned the market situation and capital markets. The capital markets is complex and brings lots of pressure to investors. We see much pressure, but we have prepared for this situation. So actively respond to this situation. When we meet with these severe situations, we are very confident about the future because the China's economic growth is sound. China's economic growth is better than other countries across the globe. It's better to meet these situations at the early of the year than the end of the year because then we will give our much time to adjust our investments. Insurance funds have sufficient liquidity, so we have growth of total assets, so we can carry out our investment and contribute to the China's economic growth. Thank you.

Next question comes from Haitong Securities.

[indiscernible] from Haitong Securities. I have 2 questions. First, I want to ask about the policy quality. We can see that the 13- and 25-month persistency ratios have decreased, especially the 13th month. The persistency ratio has decreased a lot. So what's the reason for that? And how will you improve the quality of the business? Second, I want to ask about the old-age care. And the country has introduced the policies to promote the aged care. And recently, the peer companies have made movements in terms the aged care products. But for the products, we can see there are similarities. So how do you comment on the competition and how to build your competitive strength?

Mr. Li Yuan to answer the question about the quality.

This is -- we can see that in 2021, the 13 months and 25 months persistency ratios decreased. The reasons are that, first, because of the pandemic, customers has been influenced by the economic situation and it's hard for our agent to visit the customers. So it's posing stress on the renewal business. And also, we can see that in past several years, the company focused on the critical illness insurance. And then we shifted more to aged care and [ similar ] products. And the third reason is that since 2020, the company shifted from offline managemental to online management because of the pandemic. So the management tools and management results were impacted by this shift. And just now [indiscernible] introduced the renewed premiums of the company, totaled CNY 116 billion, which exceeded our annual target. So renewal premium plays as a part of the premium growth of the company. And in the future, we will take the following measures to improve the quality. First is we will include the persistency ratio into the assessment. And we will convene specific meetings on the persistency ratios. And we will have the meetings with the last 10 branches. And we hope the general managers of the branches have the, first, major responsibility for the persistency ratio, and we hope to strengthen the management to solve the problem. And just now, as mentioned, we hope to reform the existing sales team. Even though the agent head counts decreased, the high-quality performance agent had increased, which can get the whole team and create a culture of high performing. So this will help to solve the problem of agent quality. The third is we will strengthen the management of process and build the alert system. And we hope to establish an integrated and [ qualitative ] management of the FYP renewal premiums to increase the persistency ratio.

And lastly, Mr. Zhang Hong to answer the second question.

Thank you [indiscernible] for your question. I will try to answer your question about the aged care. For NCI, in the past 2 years, we had a life insurance business as the core and take the aged care and health care as the support. And we have promoted the aged and health care industry in the past 2 years. And the progress have been made and are satisfying. And I can give you several numbers. In terms of the health and aged care since the second half of 2020, the sales is relatively sound. In the end of 2021, the qualification of residents issued to the customers has surpassed CNY 4,000 and which means that it will support the premium growth of over CNY 6 billion. And in this period, the [indiscernible] aged care community and [indiscernible] aged care communities has been put into operation. And also, we have care communities in Yenching in Beijing and will be opened this year. And for our company in -- while promoting our aged care facilities and industries, we also have house management companies and the rehabilitation hospital. In the beginning of this year, the rehabilitation hospital has seen -- having the certificate of the government of the medical insurance. And also, we have cooperated with our life insurance business and introduced the integrated product and launched last year and have realized good results. And for the health care and aged care industries, the company's management team and also the Board pays close attention to it. And we've made a lot of measures in this regard. And also the central government emphasized the aged care and health care of the country. And you might know that last year, the government has introduced policies that we need to actually respond to the aging population in China and to promote the home aged care and the aged care in hospitals integrated models. And as a state-owned company, we will respond and follow this policy and shoulder our social responsibilities to further strengthen the aged care business. And in the future, we not only have confidence also with specific plans. We have our 14th 5-year plan, which has been approved by the Board. And generally speaking, the aged care and health care will follow the development of the strategy of -- with [ leverage ] core to solve the difficult questions facing the aged care and health care and invest more resources and launch online and offline business and promote integration to prove the added value of the company and build an ecologic circle of both life insurance and aged care and health care business. And we are happy to see that NCI has made progress in this regard. And still, we have gaps compared with the peer companies. Those gaps does not mean that we will lag behind forever. The Board has approved the 14th 5-year plan, which will be the blueprint of the company in promoting aged care and health care business in the future of the company. And in the future, we will make further movements and take measures. And I would like to share with you for the one hand, the management team has established a coordinating team as the leading team, and management members will be the team member. And we hope to coordinate resources, and the resources will be larger than the previous times we invested. The second is we will strengthen the innovation of the product and the integrated products. And in fact, we also plan to establish operating management company. We hope to create a professional platform to coordinate resources and promote our aged care and the health care projects and have a coordinated management with professional management. And in this process, we will provide service covering the whole life process of the customers, especially the life insurance and the health care -- and health care and aged care business will be further integrated with long term and the whole life annuity insurance as the core to meet the protection demand of the customers. And also, we have multiple protection products, [indiscernible]. And those critical illness product can be integrated with the aged care communities. And also, we will invest in more resources in our aged care industries. We will invest the light and heavy assets. And in [indiscernible] we have started our communities and next -- which we'll find new products in other cities, including Beijing, Tianjin and [indiscernible] River region. And we hope to have the projects in the North, the Southeast and the West and the Center in the country. And we hope to provide more service for customers in our communities and cooperate with other aged care companies and improve and expand our service. In fact, we will also improve our layout in the medical care and health care. Just now you've mentioned for the consumptions, the service and the products, what will be our expectation on that? In the 14th 5-year plan, we have set a strategy and we will not satisfy the customers' demand for leaning and will provide service wealth -- for health management. And in the future, we hope to improve our layout in the medical and health care industries. And just now we've mentioned that we have our rehabilitation hospital and the certificate issued by the government. And we can use the social securities, which is beneficial to our business growth and we have health management companies and we have a cumulative experience in health care business. And we will establish offline examination, online consulting to upgrade and improve our service system. At the same time, we hope to create online medical service platform to provide the consultants to the health to customers and also provide main treatment channels. So hopefully, in the future, we can create our aged care and health care industries. And we believe it's promising. And we will strengthen our talent building. And we believe the talents are pivotal to this regard. And we will attract talents with market incentive plans and appoint those -- the talented ones the life insurance and the health insurance and the aged care insurance industries. Though now that -- behind that, we are confident on what it measures for its development.

Next question from [indiscernible].

I'm journalist [indiscernible]. How do you evaluate the 2021 results? What is your 2022 strategy?

I will elaborate on this question. The year 2022 is a difficult year for life insurers because of COVID-19 pandemic and the severe external situations. But New China Life will adhere to the general principle of pursuing progress while insurance stability, resolutely implements the development plans made by the Board and the executive committee. We will take various measures to stabilize sales team and the business. We will achieve steady progress in operations. First, we actively integrate into the national development. In 2021, the company showed a social responsibility and practiced environmental protection. We did a lot of job. We matched the liabilities of insurance products to help fight against COVID-19. We also launched the policy-oriented insurance business, including the exclusive product for pension insurance. We also made investments, including technology innovation, high-end manufacturing. We supported the real economy and continue to carry out the sanitation projects. We supported the quality elevation such as the shipping [ county ] in Guizhou and Inner Mongolia. We also help disaster relief in Henan province. We donated our money. In terms of liabilities, we achieved high quality and steady growth. The GWP amounted to over CNY 160 billion, up by 2.5% year-on-year. This growth rate may be lower than past 2 year. But this growth rate is hard won because of the environment. So we have growth momentum. And in the first year premiums from long-term insurance amounted to over CNY 40 billion. And renewal premiums also increased -- or sorry, the contributor for the growth of GWP. In terms of asset management, the investments return overachieved. Given the growth of asset size and the third-party business, the company achieved total assets over CNY 1 trillion. To manage CNY 1 trillion is not an easy thing. The investment return is excellent. The total investment yield was 5.9% That is a good figure in the history of New China Life. We see many highlights in the 2021 results. But we also met some difficulties and challenges, such as the reduction of NBV and the difficulties of marketing health insurance products, so a sluggish growth. And the new products such as [ We Min Bao ] brought challenges to the marketing of health insurance products. The persistency ratio reduced. That's the difficulties we met last year. In 2022, we will take various measures to solve these problems. Life insurance industry meet these difficulties because of the downward macroeconomic growth and the decreasing demand. For life insurance, we will be confident in development. We will have momentum in growth. Life insurance rely on talents to develop. So both the assets and liabilities business will focus on talent. In liabilities, we will focus on sales team building to stabilize our sales team and improve the quality of sales team. We are confident in the potential of life insurance because the country has implemented measures to encourage the buying of insurance products. And from the China's economic growth, the insurance penetration density are lower than developed countries. So there is a gap. And the customers' protection like Medicare, education and housing are 3 great pressure ordinary people, especially higher medical costs, higher treatment and the new drugs. So there is great room for the growth of health insurance products. Including the aging population, the aging population will increase the demand for long-term annuity products. We will strengthen the brand building, meet customers' demand and offer diversified products to meet customers' demands. In terms of health insurance, we will upgrade the major products such as multiple protection products to keep our competitiveness. The second is to enrich the endowment critical illness products to meet the middle and the low end customers' demand. The third is to enrich the product function to protect the elderly and children. The fourth is the protection for the women. The fourth is to develop innovative products and increase the product's competitive needs. That's my answer. Thank you.

Next question comes from [indiscernible]

I'm [indiscernible]. I have 2 questions. First, I want to ask about the net profit. We see that the company has provided a large accounting reserve and totaled CNY 12 billion accounting for that, a large proportion in the net profit. I want to know what's the reason for that? And in the past 2 years, the company appropriated a large amount of reserves. And do you have specific reasons for that? The second I want to ask questions about the sales team. We've seen that the qualified ratio of the company remain flat compared with the annual interim result of the company. And do you see that as sign for a stable rising trend?

Mr. Gong will answer the first 2 question.

For the profit, the reserve account for less proportion in the net profit. And the changes of the constructions contributed to that. And the assumptions can show the result of the operation in current days and the assumptions can show the reality, so the company will make adjustments and to -- retrospective of the past 2 year's performance and made adjustment and taking to consideration of the future trend in 2021. The changes of the assumption when it comes from the 750 moving average yield and also just now you mentioned, we have made adjustment based on the worse end of the mobility rate. And the changes of the assumptions resulting in a large amount of reserve appropriated. And the peer companies have released their annual report, and I have seen that. And I believe [ SCS trend ] is similar to that of our peer companies. And Mr. Yang will answer the second question.

Thank you for the question. About the qualified agents, generally speaking, the trend of -- is similar with our peer companies. The total agent head counts decreased, but the qualified agents remains flat. And productivity per capita has seen increase. We can say that for dividend insurance business, there are several pressures first and the decrease of the total agent counts as a general trend. But because in the individual insurance channel, just now mentioned, we've made active measures and the professional moves, so the qualified agents head counts stabilized. And through our 4 promotions, we hope to increase the quality of the agents. We strengthened trainings to improve the quality of both existing agents and new agents. Secondly, we made efforts in improving our agent team. And we strengthened the growth of higher-performing agents and qualified agents. We have [ MDRT ] and our summit and our elite club. Those help us to stabilize our high-performing agents. And the agents with over 300 commissions for 12 consecutive months has increasing head counts. And the high-performance culture is -- prevails in our existing team. And hopefully, through the reform of our existing team and the beauty of the new team, we hope to build high-performance agent teams. And the old and new teams may have a better quality and performance. And hopefully, through these matters, we can improve the quality. Thank you.

And last, I will answer questions from our e-mails and hotlines. We select most concerned questions. The first question is the buyback shares of the company. The company now has no buyback shares The company will focus on life insurance, but adhere to asset liability dual engine, driving both volume and value growth. The company returns to life insurance, improve life insurance functions to achieve high-quality development and offer comprehensive protection and services. The second is to offer wealth management products and services to meet customers' demand in diversified wealth management. The second question is the increased dividend distribution. The company has no plan to adjust dividend distribution. Since 2016, the company has increased the dividend distribution, accounting for 30% of net profit. That is in line with the company's situation and regulatory requirements. Thank you for your concern. The 2021 results announcement is over. If you have further questions, please contact our IR team. Thank you.