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

This is a good opportunity for us to meet with you, the investors and analysts face to face and also friends from the media. We will take this opportunity to look back on our results in 2022. And as the host today, I'm Gong Xingfeng, Vice President, Chief Actuary and Board Secretary of the company. Today's annual results announcement is a good point for us to review and report our annual results in 2022. First of all, I'd like to introduce the senior management attending today. They are Mr. Li Quan, Proposed Chairman and President; Proposed President, Mr. Zhang Hong; Mr. Yang Zheng, Vice President and CFO; Vice President and Chief Risk Officer, Mr. Qin Hongbo and the Vice President, Mr. Wang Lianwen, welcome. Also, we have invited 2 directors, independent directors, Mr. Ma Yiu Tim and Mr. Geng Jianxin to attend online. We have a briefing session and a Q&A session for today and the simultaneous interpreting is provided. Now let's begin the first session. Mr. Li Quan will introduce the 2022 overview on the insurance business and Mr. Yang Zheng will introduce investment and the financials, I will introduce embedded value. I will give the floor to Mr. Li Quan.

Ladies and gentlemen, good afternoon. Welcome to NCI 2022 Annual Results Announcement. First of all, I'd like to introduce the 2022 overview. In 2022, it's a difficult time for the industry, but our company maintained our strategic focus, deepened the return to the essence of insurance and advanced healthy and stable development. The major results are as follows: GWP totaled CNY 163.1 billion. Total assets reached CNY 1.25 trillion. Equity attributable to shareholders of the company was CNY 102.9 billion. Net investment yield was 4.6%. Embedded value reached CNY 255.6 billion. Comprehensive solvency margin ratio was 238%. In 2022, in the face of severe market adjustment, the company adhered to the general principle of seeking progress while ensuring stability, improved the overall layout with life insurance as the core, supported by wealth management, old-age care and health care and empowered by science and technology. One prominent brand value -- we have become a member of the Fortune 500 for 2 years in a row and world's top 500 public companies by Forbes for 9 years and also world's 50 most valuable insurance brands for 8 years. Second, solid main business. NCI has always adhered to the essence of life insurance, explored market demand, optimized marketing channels and continued to improve sales team and the service network to build a professional and high-quality sales team with broad customer base. Third, supportive business collaboration. The total assets of the company exceeded CNY 1 trillion. Investment remains prudent and forms excellent synergy with liabilities. Health care and old-age care businesses support life insurance greatly. A comprehensive old-age care and health care service system of old-age care and health care community plus nursing and medical community plus leisure and tourism community has been established. Fourth, convenient and high-quality service. The company continues to strengthen application of technology and optimize service supply and the process. And value-added health service extended, our service quality and efficiency continue to improve. Fifth, professional and efficient management. After 26 years of development and accumulation, we have a management team with rich experience and the key marketing insight as well as a group of talent with high quality and professional underwriting, actuarial and risk management skills, the management efficiency constantly improves. In terms of risk management, NCI continued to improve our risk management system with the system spanning all major business areas. Steady progress has been made in risk management system and procedure and the risk monitoring and reporting mechanism optimized. Our risk management capacity has also been enhanced. The risk management system, timely identified risks and gave warnings, internal controls covered home management modules, compliance management system monitored and reported key assessment indicators. Also, we constantly optimized our risk monitoring and reporting mechanism, set up early warnings intervals for monitoring and analysis of the key indicators for major risks, including marketing risk, credit risk, insurance risk, et cetera. Also, we have a risk warning and reminder of related risks. In 2022, there was no major risk event of the company. In terms of ESG, we actively pays back to the society, serves national development strategy, fulfill social responsibilities and contributes to people's livelihood, manifesting the responsibility of a large state control listed company. First, we practiced sustainable development, building a green operation system, providing financing for green transformation and invested CNY 14.7 billion in green development. Second, support the real economy. By the end of 2022, we invested over CNY 700 billion to serve the real economy and invested offer CNY 200 billion to serve strategic emerging industries. Third, develop health care and old-age care businesses. We rolled out 3 old-age care projects, namely Lexiang, Yixiang and Zunxiang improved operation of 19 health management centers. The New China Life Health -- Excellent Health became a designated medical institution for basic medical insurance in Beijing. Fourth, we implemented the Healthy China strategy by the end of 2022, policy-oriented health insurance projects covered 9 provinces and served 17.95 million residents. Fifth, support the construction of a multilevel and multi-pillar pension system. We carried out exclusive commercial pension pilot program and the developed individual pension projects. The New China Pension won 19 occupational pension portfolios in 16 provinces. Sixth, contribute to rural revitalization and engage in public wealth and charity. We invested over CNY 15 million to targeted areas, donated money and supplies to about CNY 19 million, donated total sum assured about CNY 400 billion to sanitation workers. In Wealth Management, by the end of 2022, asset management company managed entrusted assets amounting to CNY 479.6 billion, of which CNY 437.7 billion of portfolio asset management products increasing by CNY 171 billion and CNY 294 billion compared with 2021, 2020 -- and 2020, respectively. In terms of customer service, we adhere to the customer-centered philosophy. And through our diversified markets across the country, we offered about 33 million individual customers and 80,000 institutions customers with our products and services. In quick claim settlement and the premium services, since 2011, our total insurance benefits and claims amounted to CNY 394 billion. Self-service WeChat claim for individual customers has achieved a 24/7 online claim filing with over 96.72% online claims and average of settlement time is 0.56 day. In product supply, we focus on customer needs and provide medical and illness insurance products, providing insurance protection in all fronts. Also, we built a diversified product structure to meet the diversified needs. In customer service, we have over 1,600 outlets nationwide and have 630 senior care stations. We intensified our construction of multifunctional and human agents and AI agents. Our lightweighted and distributed cloud platform Suixintong was established. The new generation of smart cell -- self-service machine was established and our all functional media platform covers phone call message, website and WeChat. We gradually provide professional human agents and AI at the same time at service. Looking into 2023. The life insurance industry has entered a new cycle of high-quality development. Liability business will be integrated into the construction of the old-age care and health care system and the asset business will be integrated into national strategies to highlight the long-term value of insurance funds. In 2023, NCI will actively integrated into the new development pattern and respond to industry challenges. In business development, we will improve business value, stabilize business volume, shift to long-term and diversified business, deeper industrial coordination and consolidate the foundation for development. First, maintain strategic focus and pursue long-term development. During the 14th 5-year plan period, we will enhance new growth drivers, promote overall development layout with life insurance as the core supported by wealth management, old-age care and health care and empowered by science and technology. Through the development of old-age care and health care businesses as well as asset management business, we will strive to make life insurance business bigger and stronger and enhance technological empowerment. We will strive for healthy, sustainable and high-quality development. Second, we will promote transformation to improve business performance. NCI will optimize product structure, strengthen product innovation, develop long-term business to diversify product structure and we will improve business quality, improve efficiency. Third, based on the main responsibility and the main business, we will serve people's livelihoods. We will continue to leverage risk management and investment management, enrich the supply of inclusive products and explore the development of long-term care insurance, participate in the construction of commercial pension system and contribute our share to the social economic recovery. Now let's start the insurance business part. In 2022, faced with external situations, we responded to multiple challenges, focused on market demands and firmly pursued high-quality development. Stable business performance was maintained. GWP reached CNY 163.1 billion, in which FYP from long-term insurance business totaled CNY 38.8 billion, accounting for 23.8%. Renewal premiums accounted for CNY 119.7 billion accounting for 73.4%, up by 2.5% as a solid contributor to premium. Short-term insurance reached CNY 4.6 billion, accounting for 2.8%. Breakdown by channels. Individual insurance channel realized premiums of CNY 116.4 billion accounting for 71.3% (sic) [ 71.4% ]. Group insurance channel realized CNY 43.9 billion, accounting for 26.9%. Group insurance channel realized CNY 2.8 billion. And in individual insurance channel impacted by multiple factors, including frequent pandemic outbreaks, lack of demand and shrinking sales team, FYP was CNY 10.7 billion, among which FYRP accounted for 94% of our FYP from long-term insurance business. And we strengthened management on renewal business, which amounted to CNY 103.8 billion, accounting for 89% of individual insurance premiums serving as a bedrock of the channel. In individual insurance sales team, we cleaned agent headcount and worked hard to build a young, professional and urban sales team. By the end of last year, agent headcounts in individual insurance channel totaled 197,000 and the monthly average qualified agents was 45,000. Our monthly average comprehensive productivity increased to CNY 3,200 growing by 18.8%. In bancassurance channel, we prioritized our regular business and improved cooperation mode and the product and service supply. Premiums of the channel totaled CNY 43.9 billion, increasing by 7.8%, value contribution increased by 6 percentage points. We have multiple insurance products to meet the diversified needs of our customers and we have comprehensive cooperation layout. We cooperated with major state-owned banks and joint stock banks and their businesses' growth boosted. Our productive team developed a lot. We are committed to building an elite team, created a service operation and training. Also, we hold the bottom line of risk control and compliance. We focused on key indicators, strengthened the monitoring of key areas and the persistency ratio improved steadily. For bancassurance premiums, FYP reached CNY 28 billion, up by 11.8% (sic) [ 11.3% ]. First-year regular premiums from long-term insurance amounted to CNY 7.7 billion, up by 7.9%. Renewal premiums totaled CNY 15.9 billion, rising by 2.4%. For major products, in 2022, we explored customer demands. FYP for our long-term participating insurance amounted to CNY 20.3 billion, increasing by 11.4%. FYP from long-term traditional insurance amounted for -- amounted to 14.5%, representing a minor growth. Due to sluggish health insurance business and the reduction of agent headcount, FYP from long-term insurance business totaled CNY 4 billion. In terms of business quality, 13-month persistency ratio of individual life insurance was 82.6%. Surrender rate was 1.8%, down by 0.2 percentage points. That's all for insurance business. Now let's welcome Mr. Yang Zheng to introduce the financials and investment part.

Thank you, Mr. Li Quan. Next, I would like to introduce the financials and investment of the company in 2022. The total revenue of the company's over CNY 209 billion and the net premiums and policy fees is CNY 160 billion. Just now Mr. Li Quan gave a detailed introduction and investment yield is CNY 46 billion because of the similar external environment, the investment yield decreased. The net profit attributable to shareholders of the company was CNY 9.8 billion. And this is closely related to the insurance business. And for the expenses, due to the tightened and prudent management of fees, the management and expenditure efficiency has improved. The commissions and management fees has decreased. And for the profit and losses, we have disclosed detailed information. And now here, I will just introduce the big numbers. And next, I would like to introduce the investment. For the investment assets, since 2019, the company has employed the strategy of asset and liability dual engine trading growth and the total assets and investment assets have seen rapidly growth year-on-year. And by the end of last year, they have increased to CNY 1.2 trillion and CNY 1.2 trillion respectively. For the investment yield in the past several years, the company stick to prudent long-term value investment philosophy and taking into consideration the discipline and the yield grasp opportunities and that investment yield in 2022 was 2.6%, up by 0.3 percentage points. And in the past 10 years, the average total investment yield was 5.4% higher than the major investment assumptions in EV valuation. So in the long term, the investment yield can cover our liability cost. So the investment risk under control. And for the investment portfolios in 2022, the portfolio is relatively stable. In 2022, the term deposits has increased and the debt financial assets increased and the equity investment is relatively flat compared with the last year. And in the investment, the company attach importance to the control of credit risk and take a series of measures to control the investment risks. And for the non-standard asset, which is a feature of NCI. In the past several years, we have constantly talked this topic with the market. Similar to the consensus, the proportion of non-standard assets to 18.4% of the total investment assets down by 2.1 percentage points, which is in line with our expectations. And in the asset, the rating was -- the proportion of AAA and non-standard asset account for 98%. And for the solvency of the company, we all know that the regulators has promoted the C-ROSS II. The standard for the calculation of solvency margin ratio has changed a lot. Core solvency margin ratio of the company is about 140% and comprehensive solvency margin ratio was 238%, which are higher than regulatory bottom line requirements. So this has provided sufficient margins for the development of the business and provision of risks. Next, let's welcome Mr. Gong Xingfeng to introduce the embedded value.

Thank you, Mr. Yang Zheng, I would like to introduce the embedded value of the company by the end of 2022. The EV of the company is CNY 255 billion, remaining stable. And the value of the In-force business is about CNY 89 billion and adjusted net loss is about CNY 165 billion. To -- let's go to the analysis of the change. Operating-related changes contributed to an EV growth of 8.6%. Even though there's a lot of volatile in the capital market, after calculating the economic experience variance the EV has remained stable. For the new business value, due to the insufficient of the market demand, limits on the sales and recruitment in individual life insurance channel, the EV of the company decreased to CNY 2.4 billion. This all for the embedded value. So this is the end of the presentation. Next, let's go to the Q&A session.

[Operator Instructions] Next, let's go to [indiscernible] the questions.

Thank you for giving me this opportunity. I'm [ CMC Chung Li Fong ]. I have 2 questions. The first is about the investment and the second is about liability. We have seen that the net profit in Q4 has improved a lot, and we have improvements in investment. Our investment yield and the net investment yield across the year have among the best in the peers. How did you achieve this? And what investment contribute to this? What are your outlook in -- for 2023? And also for liability, the industry have many confidence for 2023. And what is your view on future development?

Mr. Yang Zheng will answer your first question.

Thank you for your question. And thank you more for your support for our investment capacities. Actually, in 2022, this year is not for the life insurance industry and also for the general investment industry is a very hard year. The general pressure and individual pressure, I believe everyone has insight for this. Actually, over the years, our growth in capacity of investment have always been a top priority. And we hold the opportunities for investment yield. In Q4 of last year, the short-term investment achieved a better yield. This shows our company's capacity in seizing opportunities of short-term investment. And we can quickly achieve our investment yield in short terms. We know -- you may all be aware that in Q4 of last year, the capital market has injected a great growth driving force for the general market. And also for our general investment, we have been admitted to our general principle, and we have achieved steady progress. Our major responsibility is to seize market opportunities. Last year was a difficult year with much pressure. And this year, we will meet more opportunities and challenges. The major task of the company is to build the market opportunities and continue our investment adjustment. Any individual investment will not impact our general yield in the long term. So our investment yield is accumulated through the year and with multiple investment.

I'd like to make a few more points. You just mentioned that in Q4 last year was important period for our company and our investment team was very patient to seize the opportunity in Q4. From September, when the market was at a low point, our investment allocation was improved a lot, which brought us with a generous yield, including our shares and the bonds and also our investment in Hong Kong Stock Exchange. Mr. Yang just elaborated on the general level, and I may talk about things that is more specific. Actually, in last September, we all know that the shares in Hong Kong stock market declined a lot to about 12,500 and we increased our investment, so our investment yield was turned to a positive range. From what we can see in this channel, we have over CNY 30 billion investment in the Hong Kong Stock Exchange and under the general 20% decline of the general market, we have achieved 5% of growth. From what I see from the public data, this is a rare results.

I will answer the second question. I'd like to say something else first. Before I enter this conference room, I see many of our guests are exchanging business card and talking with each other, and I'm very happy to see this thing because our customers are people. And only people to people exchanges can bring -- can help us bring more demand. The past 3 years has been very difficult for this industry, and we moved many of our business online. So this year -- you just mentioned the word confidence. I think today's scene and atmosphere can give us more confidence for this industry. In this year, we can see the industry is rebounding. So we can have more opportunities to communicate with the market and give full play of our advantage under the macroeconomic situation, recovery of China's economy, we can better operate. So what I just said, is also our confidence and decision for 2023. At the beginning of this year, we proposed at a work conference that our general principle is pursuing growth while maintaining stability. And the key word is growth. So return to the value and in terms of specific strategies, we will make majorly 3 strategies. The first is in businesses. In terms of our concept, we'll continue to implement the new development philosophy and follow the way of high-quality development. This is embodied in many areas of our company and including how to improve our business management and team management and also our product, our cost and productivity. Actually, in 2022, we have made much progress, which laid a solid foundation for this year's development and we strengthened our value management system. The second is in business. Firstly, we attach great importance to stabilizing the volume. And based on that, we will improve the structure. This is the 2 key points in our business management. Just as what the central government has asked, we need to stabilize the volume and improve the quality. For our company, we are recovering from the previous difficulties, and we will have more space and room to improve our structure based on our previous development. You may have followed some of our products like regular premiums from 10-year business. This all will be shown in our -- this year's assessment and our business will be stabled and value will be improved. The third is management. The improvement in value relies on the general management's improval, focusing on high-quality development. We will implement fruitful, useful strategies to build our channels. You may have further questions regarding channel building. I will not elaborate on this now. The key is for the individual channel, the bank reference channel, we will strengthen their capacity and improve their productivity so as to improve their value contribution and ultimately, to improve our quality. In the past years, our team was impacted by the pandemic. And in 2023, through improving our quality, we hope to improve the business and reduce the surrender rate to retain more business in the company to show our good quality. Also, we will improve our efficiency in management, improve our resource utilization. So in terms of concept, business and management, we will follow the general trend of the economic recovery, improve NCI's quality, turn that point -- turn down in point and achieve progress. That's all for my answer. Next question, please.

Management team, thank you for the opportunity. First, congratulations on the stable business performance. We have seen an adjustment in the [ bancassurance ] channel. So can the management introduce your strategy in terms of productivity and development strategy in the bancassurance channel?

In 2022, China's economy has encountered great challenges, and we are also seeking progress and reform in this year. The total agent headcount has decreased. Objectively, the reason is that we have to adjust along with the industry and subjectively because the fake agent existed in a team. So we have to clean the agent team and increase the foundation of the agent team. So we have formulated 3 measures. First is promote the productivity. Second is optimize structure forces, improved the growth after [ last year ] effort. So the productivity in 2022 increased about 20% year-on-year. And in the first quarter this year, the performing agent of the company has increased about 100% compared with last year. So we can see the sound increase in productivity. So in the future, the company will further update the structure and stabilize growth. Stabilize the structure means we will stabilize the proportion of high performance, quality and high-margin products as well as the investment in team building. We will decrease the investment in the investment [indiscernible] to lay a foundation for long-term sustainable growth as a state-owned listed insurance company. We think we have 3 [ things ]. First is our state and enterprises feature, which means stable. The second is concentrating on life insurance business means we concentrate the lend business, and we have professional. The third is we have high executive capability. In the past several years, the resilience and the strength of the agent team is ranked the top from around the industry. So we -- as a state-owned enterprise is we'll focus on the life insurance as the main business and increase the executive -- execution and performance of the team. We will try to be innovative and be an innovative agent, so we are confident about our growth in 2023. Just now Mr. Gong Xingfeng has also introduced in the business field, we will stabilize the volume and increase the volume. This year, the renewal premiums of the company has seen positive growth, which means the business quality has improved. And the first year regular premiums and values have seen sound growth. The jump-step period is important for the growth of the whole year and the sound growth in Q1 will lay a financial for the course of the whole year. So in this process, we'll further think about how to expand and sustain our growth and this require us to increase our core competitiveness, which I believe is we should build a team loyal to NCI and are confident in future growth. And this is the quarter growth and is our competitiveness. So we can -- we believe we can expect high-quality growth of NCI in the future. Thank you.

I'd like to ask 2 questions about product strategies. The first is the demand is high. And the support for Q1 is also solid. What is your take on the future development of incremental whole life insurance? And maybe there are further regulatory requirements for this regard. What is your take for this area? And the second question is about health insurance. Mr. Wang just mentioned, we need to improve our sales of high-value product. From your point of view, we have -- we witnessed a rebound in high-value product. Thank you.

Mr. Gong will answer your first question.

I think your 2 questions are consistent and I will answer you in general. The question is mainly about the product strategy for 2023. Many of you may be familiar with the history of NCI. And you may remember that we are among the first to do this business and we were a successful model. However, times have changed over the years and we have to follow suit. The present market is much different now. We think a diversified product structure and the selling product capacity is the foundation for our future development. We should not focus on only one type of project. Many say critical illness insurance are not popular in the market. Simply put, we don't see many new customers, and we cannot sell this to the old customers. Over the years, we promoted and popularized critical illness insurance to our old customers, and many of them have followed this product for a long time. So there's not much room for our old customers. In our team transformation, there was once a time we were only focusing on single product. This was one of the sources of our challenges in the past several years. And now we are focusing on finding new demand. Now we're realizing that no matter the annuity insurance, endowment insurance and high-level medical insurance, incremental whole life insurance, like you just mentioned, are all demands of our customers. How to improve our product familiarity of our agents and how to dig deep of the customer demands is our main priority. Mr. Wang just mentioned that we need to improve the quality team and their productivity. What is a premium team, not only reflects their ability to selling products. So we strengthened the replacement of product over the years, including the incremental whole life insurance. The market have a various comments for this product. We will follow the market changes and make following adjustments. Also in terms of training, promotion and marketing logic, we will make more efforts to achieve more yield and value contribution. Moving on, the source of high value will not be contributed only by health insurance. The decline in 2022 was partly because the decline in health insurance. How well will be achieved in terms of health insurance is closely related to our present situation with the team and with our customers. So we need to strengthen our diversified product strategy to provide more drive for our development and growth. That's all for my answer.

[indiscernible] the next question.

I'm [ Mr. Chang from Cinda ] Securities. Thank you for the opportunity and thank you for your efforts in the last year. And I have 2 questions. Just now Mr. Gong has talk about it. I want to ask a question about liabilities. First question is, we've seen the first year regular premiums, especially the premium was 10 years or more has decreased. I want to know the major reason for that and for the company. Do you think it's a short-term influence of the pandemic? Or do you think it's because the long-term demand in the market has declined? And generally speaking, what are your measures to promote the growth of long-term business? The second is about the distribution channels and in the bancassurance channel, the company has a leading market status. And now how do you comment how to position the bancassurance channel and how to explore new customers and pursue cooperation with new institutions? And what are the relations between individual insurance channel and the bancassurance channel? Will that change this year?

Mr. Gong will talk about the first question and Mr. Wang will answer the second question.

It's difficult to answer your first question because if I say I don't want to sell the long-term business, I will say that I will not be chooseful. And why the sales of long-term insurance business has decreased. So reasonably, we want to increase the value and to increase the long-term business. And while we are encouraging this kind of business that the market, especially the team has responded and give the feedback. And in the past several years, the pandemic has a huge influence on the market. The major customers of us is not the guests present today, major customers come from the third-tier or first-tier cities, mostly come from the countries, which accounted for a large proportion in the customer base. Because of the pandemic, the income has been impacted by these products. So they have encountered some uncertainties, they cannot imagine their lives in 10 years or 20 years. Our team has to survive in the past several years, even though the agent headcounts decreased. It's not -- we do not care about team and neither we do not want to attend a team. Actually, we do want the agent team can survive and grow with the company that -- still, we have a large ratio that agents had dropped out. So in this circumstances, we propose that can we -- in terms of the strategy and product allocation, give more opportunities to the agents. So in the past 2 years, it's not -- we do not want is because we cannot grow and increase the investment into the business. This year, I think the segments will change and the economy and external environment may change. In this year, for the major changes in assessment, we have take the long-term premium as an independent indicator for the branches. And this is an important indicator that will be accessed by the headquarter and as well as the branches. So this indicator is increasingly important to the company, and we are strengthening that by a series of measures. This is major products -- measures that we have taken to improve the high-quality growth of the company. And that's all for my answer.

Mr. Wang will answer the second question for the -- second question, Mr. Wang will share the changes of long-term business.

And there is decrease in 2022. What are the major contributors to that? They are customers, agents and product for customers. Mr. Gong has elaborate the demand of customers in the past 3 years has changed because -- also because the [indiscernible] has been a supplement to our product. And in 2014 to 2019, the agent headcount has grown a lot, but there are some fake numbers in the agent headcounts number. So we have to make that more solid. The second is about product. For the life insurance product, there are some changes. The product of health insurance has shifted to the incremental life insurance in this process. Some changes have happened and in this process, we have to climb one mountain and climb a higher mountain and climb down from that. So in 2021, '22, there's decrease of the FYRP and value. But if we have got to the bottom, we can expect a bounce up and expect a high growth. And also, the Chinese people lack to reserve and our long-term stable life, so incremental life insurance has come out, which has increased the productivity of agents and the stability of the industry. And this has increased the income of the people. But as in time, we have seen the decrease of health insurance. But in the long run, the middle and long-term insurance can be a better supplement. So in the future in 2023 and 2024, we can expect a growth curve and as now the analysis and ask about the bancassurance channel. In the past several years, the bancassurance channel has been an important distribution turn of NCI. We attach importance to its growth, especially after Mr. Li Quan has become the CEO of our company, we attach importance to the position of the bancassurance channel, and we have our strength and foundation as good agent team and customer relations. So the bancassurance business of the company has seen steady growth in the past several years in both the -- regular -- first year regular premiums and values. And by virtue of our system just now mentioned as the state-owned enterprises. We have solid cooperation with the banks, especially large state-owned banks. We concentrate on life insurance business. And we have advantage in life insurance product, which is in line with the demand of banks' customers, so we can see their demand and requirement. And for the agents in the bancassurance channel and the measures of the channel, we can better help the service to clients and banks. So this year, our performance in bancassurance channel is sound compared with the comparable peers and we rank in the top 2 and in the future, we will further concentrate on the life -- focus on the bancassurance channel and support its growth. We will stabilize the volume and attach importance to value. And we have single premium business, but the value for this product is not negative, it's positive. And the VNB margin of the channel is sound and its proportionate contribution to the company has increased. So we believe the bancassurance have a sound and promising future. And the second, you talk about the relation between [ long-term ] insurance, bancassurance channel we need to grow both channels. Life insurance is the core business of NCI, so as a comprehensive life insurer, we aim to provide life insurance products, both in life insurance and bancassurance channels. Life insurance is the core channel of the company. We are stable and contribute to the long-term sustainable growth. While bancassurance channel has received growth, we will grow the individual transition as well.

And to ask Mr. Li Quan, what is your evaluation for the general results of 2022? And also in the last year, the company proposed the 14 5-year plan which mentioned -- what are the major results and achievements in 2022? And what will be the measures taken in the future for future development? And what will be the influences of I-17 on the company and also on the industry?

So first of all, I'm the proposed Chairman instead of the Chairman of the company. In 2022, the life insurance industry was under deep transformation. And under the situation of pandemic, we have several highlights. The first is we remained the general principle of pursuing growth while remaining stability. And the second, we coordinate pandemic response and business development and the focus on our high-quality development, serve national strategy, gone against risks. The general business remained steady across the year. In our premiums in 2022, under the background of a downward economy, our life insurance business is basically in the same line and the same trend with the market. By the end of last year, our GWP was about CNY 16.3 billion, which is about the same level with the previous year, among which new policy contract was also in the same line with the general market. And the long-term premiums was amounting to CNY 38.8 billion. Renewal premiums increased to CNY 117 billion, which was a solid contributor to our general premiums, which was hard-won achievement for last year. When we made our plans for 2022, we expect it to be a recovery from 2021, but the reality was a bit different from our expectations. In last year, there was 2 months that we couldn't come here into the office and also in the end of last year, which was an important period for the life insurance industry, we also could not come to the office and we can only worked from home. So all these reasons -- our results in the last year was a bit different from what we expected. Also many of our branches could not hold their marketing conference. Under all of this background, our maintaining of stable premiums we think is a highlight of our development. The second is channel development is in line with our expectation. Individual insurance remains a solid part, but we see the opportunities in bancassurance channel and achieved quick development. Long term insurance from bancassurance channel increased to CNY 28 billion. Short-term insurance was CNY 2.6 billion and individual insurance team was hit most seriously in last year. The bancassurance channel and also in the marketing channel increased a bit. Since 2019, NCI increased our support to the bancassurance channel. I remembered that in 2019, I came here in June, and the bancassurance channel was only about CNY 2 billion across the year. Later, we strengthened the channel and promoted its growth to about over CNY 2 billion -- over CNY 20 billion across the year. The marketing channel is also a highlight. The third is our transformation and swift. We switched to a diversified product and the rollout incremental whole life insurance, mid- to long-term annuity, endowment insurance and many other products varieties. We strengthened our promotions and marketing. Life insurance and term deposits have improved about 7% compared with 2021. So by the end of December last year, the traditional health premiums is about CNY 49.8 billion, improving by 4 percentage points. The general structure is more balanced now. These are the highlights of last year. There's more question about the I-17. Actually, in China, we call it the new standard for accounting contracts. So all in all, there are fundamental changes in the new accounting standards. You may not be very familiar with the standards. But I believe you have followed this for a long time. As a professional in accounting, I will not elaborate on the techniques or technologies, but I will elaborate or give 3 thoughts on this. First, I hope we can have a professional understanding for the new standards. Actually, the new standards are fundamentally different from the previous standards. It's not simple increase. The difference between the 2 systems are like the difference between an elephant and big tree, it can be compared simply. The principles, approaches and many fundamental factors are different. We cannot simply put 2 numbers together and compare them. So we have to -- we need to have profound understanding for this. For us, the companies, and also for you, the press, we need to see this in a more professional way. The accounting results will only influence the results of the accounting and the difference will be relied on how do you view the reports. We have many kinds of reports as required by regulatory comments. And also, there are many analysis reports in terms of business operations, development. How much importance do you attach to this report are very important. They will not only be linked to the accounting and many companies do their accounting reports according to their assets or liabilities. So if you think very highly of the financial results, you can attach more importance on this. So also, we need to adapt to the new standards step by step. It's true that many of the principles have changed a lot. And for a business like us, how to show the results in a more objective and clear way is our priority in the future. And for you media friends from the media analysts or investors, if you see differences in the numbers in the future, we hope you can see this in professional way and this more accurately and don't -- please don't compare 2 numbers directly. Thank you.

[indiscernible] The next question.

I have 2 questions. Just now, the management team has discussed that there's a lot of pressure in the investment industry. And for this year, how do you expect the investment? And what is your asset allocation this year? Will you adjust your equity assets and increase its positions? And secondly, for the equity investment, how do you comment on the alternative investment and its opportunities and challenges?

Thank you for your question. In 2023, the whole country, the whole society has a lot of opportunities, and we have the convening of the 20th General National Meeting and the country has introduced a series of measures, and we have broad economic forum. All this has -- gives out confidence to the market and the reform in the financial sector has promoted the behavior in the investment field and increase its quality. So we have laid a foundation for the future growth. So in this circumstances and under this background, we believe we have more investment opportunities in the future, and we can expect more yield. And specifically, you've mentioned whereas increased the allocation to equity investment. I think for specific subjects, it's hard to tell from the asset opportunity in the short run, you're experts, and you know the segment is just [indiscernible]. We have invested resources to the Stock Connect and our previous investment behavior and the investment capability has shown that we have to grasp the current investment opportunity and assets. For example, in the last year and 2021, when we have asset a lot of local government [ debt ] and term deposits. This has shown that we have to look on the opportunities in the current time and for the alternative investments and with the deeper reform of the financial market and to introduce a more standard asset, the whole market has provided opportunities for investment and for non-standard asset and alternative assets, we may expect the decrease of this volume. And at the same time, the assets available for allocation are different compared with the external environment that we faced several years ago. Several years ago, the investment asset accounted for about 30% of the total investment yield of the company. The asset we allocated has high yield and low risk, which has provided affluent and a sound investment opportunities and resources for the company and for NCI. In the past, we have about 30% assets in non-standard and alternative assets. And we have consensus that there is shorter potential for the asset allocation investment asset and it's not that we have to allocate 1% or 20% of investment asset is because we should allocate the investment asset that has required -- reached our requirement for yield and risk and now the investment assets available for us is not -- has not the large proportion that meet our requirements. So the investment asset of company secure, and we have limited risk of liquidity. So while the risk has increased but the yield has decreased, so the investment asset is not sound investment choice for us. So personally, I believe the alternative asset will naturally decrease for the reason I mentioned. And the investment asset of company has decreased from 30% to about 18% now. So this is a general and a stable decrease, which is in line with the financial market and the country's regulatory directions. And Mr. Li Quan added that he agree with Mr. Yang and now NCI as a state-owned financial listed company, we -- in our asset allocation have some difference compared with our previous allocation. In the past, we consider the yield liquidity and security. But now for the asset allocation process, we have add a new indicator, which is the political indicator. We have to serve the national strategy. This is a key indicator for us in the asset allocation process. We will respond to the allocations of the central government party. We will play our role as a large insurance and with large investment assets play the role of long-term investment role and to connect our investment with the national strategies, the real economy, we will empower the national strategy and show the political signs and -- of the financial institution. Specifically, we will, in terms of equity investment, increased allocation in strategic emerging industries. And these industries are the key industries of the nation will increase the allocation as well and we will increase the investment in serving the ESG, which will be our focus and priority of our investment. And we will also increase the investment in innovative insurance -- innovative companies and support companies with great potential in different gross -- different growth stages and to promote the companies that has innovative and emerging potential growth, and we will introduce more policies such as will we invest the asset that is exclusively to the small- and medium-sized companies as well as we'll invest resources to the [indiscernible] and [ well ] initiative companies and projects to support the national strategy growth. And besides, I also want to mention that we have a difference compared with the previous. We emphasized the asset penetration. We should get to know the foundation and -- of the asset allocation and project. This should be in line with the national strategy. And as a state-owned enterprise, we will actively conduct the policy of allocating high payout ratio companies. Those companies will be focused in our equity investment. So generally speaking, in our asset allocation, we will be more active and especially after the successful convening of the 20th National Congress and the successful company after 2 sessions, we will, generally speaking, allocate assets that can support the market. We are confident about the equity investment this year. Thank you.

Due to time limit, we are ready to take the last question.

I'm [ Mishan ] from [ Showa Hoan ] Securities. I'd like to ask 2 questions, which are about old-age care and health care. The insurance industry has an advantage in this industry. I know many of your pension have entered into the market. What is the room? What is the market room of your products? And will them succeed the term products, how do you view their development in the future? What are your development or innovations about product development? And the second is about senior care communities. We see peers of the industry have devoted more to this industry. Old-age care business has been an important part of the company. In the next step, will you follow suit with the peers and devote more to this business layout?

I will answer your first question. About the building of the third pillar, pension system. In our compliance with serving the national strategy, we always attach great importance. In all system and all channel, we introduced the product. A good product, satisfactory for our customers and plays an important role for our construction in the commercial pension system. Just as Mr. Li Quan just mentioned, we not only serve the national economy, national strategies in terms of the construction of exclusive pension system, it's still in the introduction period, and we have made good results. In the pilot programs, we are among the first, but for this product, we still need a period of time. How to improve our layout and allocation in this business. We will need more development and cultivation. And for value rate and a profit rate are not our priorities at the present stage. In short term, we will form a bigger size and actually implement our responsibility of serving national strategies. For Healthy China strategy and to respond to our aging population, we are studying and researching more strategies and have plans to roll out more insurance products in this regard, which will be introduced in the market later. We also noticed that many local governments have rolled out policy-oriented insurance like care insurance and we hope we will have more experience in this. This is all for the first question. Thank you for your care for the old-age care and health care business of the company. At the beginning of today's announcement, Mr. Li Quan introduced the general situation of this business. So far, we have established a community and the nursing community plus tourism and a living community that is a comprehensive serving system, which was established fundamentally. We have also established a healthy, value-adding system. Our life insurance industry forms excellent synergy with this business, which was reflected in our 2022 results. I will elaborate on this later. In terms of old-age community building, so far, we have [indiscernible] in Hainan province and community in Yanjin. We have also 3 communities, namely Lexiang, Yixiang and Zunxiang, which was elaborated at the beginning of the announcement. We also have the excellent health hospital and the rehabilitation center. You may have heard this. In 2022, there was many changes. First, in terms of synergy, we signed letter of qualification about 1,625 which means CNY 1.4 billion of premiums. By the end of last year, the accumulative letter of qualification exceeded 6,000, which means that we have made great achievements in industry synergy. Also in our Yanjin community, we have carried out experiential marketing. Our marketing team and our customers, over 10,000 paid a visit to this community. Also, we have reported to our old-age community. And it will start operation formally starting the first day of May. And all of you are welcome to pay a visit to our community in Yanjin. So this is our result for old-age care. And about health management. I just mentioned, we have a value-added system. The core is to solve the problem of paying visit to doctors and prevent and control illness. We will use premium services. And our services cover over 4 million medium to high-end customers of the company. Over the past year, the patient online and in many other channels have been widely received well by our customers because they are very useful. So this shows our -- the customer stickiness and also the selling of our teams and also in terms of health management, we upgraded our body check service. Firstly, we understand our customer requirements more deeply and upgraded the services. The first is expanding service project items. There are 25 sets of items with a newly added of single organ of the body check. Regarding on the different demands of different customers, also we expand our service regions. Our body check service has covered over 300 prefecture cities. Also, we expanded our service institutions. We introduced more state-owned hospitals with tier or higher levels. This is our achievements made in old-age care and health management. You just mentioned that our peers have also made great achievements in this regard. In terms of our business layout, we have also made many efforts. Later, we will try -- we will make more endeavor and in 2023, our old-age care business, we will establish an investment platform and also improve our business layout. At present, we attach importance to both light and heavy businesses and we will focus on more strategically -- at present, we are talking with many partners -- future partners and looking for partners with long-term operation capacity. And we expect many fruitful results in this year. Also, the sign of qualification letter modeled by Yanjin community, we will open more experienced show marketing. We will also explore community senior care and stay-at-home senior care. In health management, we will consolidate our resources, establish a platform. We will take more efforts to cooperate with premium health management companies so as to provide better services for our customers. Also, to establish a system platform centered with health management and build up brand of the company. Thank you.

We would like to take this opportunity to answer 2 questions asked most about the IR e-mail and our phone calls. The first is about the achievements of wealth management in 2022 and the development plan for 2023. In 2022, the wealth management business of the company grew rapidly. By the end of 2022, the managed assets exceeded CNY 1 trillion. Mr. Li Quan just elaborated on this. And in 2023, we will continue to focus on the business and serve institutional customers meticulously, intensify our product system and strengthen the investment allocation between diversified assets and multiple strategies so as to provide comprehensive services for our customers. The second is whether the company will continue to improve the distribution ratio of cash dividend. We always attach great importance to investor rewards, and our policy has been consistent and stable in line with our lasting interests and the general interest of the shareholders. Since 2016, the distribution ratio has been capped at over 30%. This is in line with our business operations and the regulatory requirements. Lastly, thank you for your care for and attention to NCI. For further questions, you are welcome to contact our IR team. Due to time limit, this is the end of the 2022 annual results announcement. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]