ZhongAn Online P & C Insurance Co., Ltd. ($6060)

Hello. Good day. Welcome, everybody, to attend the 2025 performance announcement for ZhongAn Online. [Operator Instructions] Just to remind everyone that we are recording this meeting. Now I give the floor to management. I would like to provide the floor to Madam Zhang Lin.

Hello, dear investors, dear analysts and media friends, good afternoon. Welcome, everyone, to attend the 2025 whole year performance announcement from ZhongAn?Online. I am from the capital market and IR team. My name is Zhang Lin. First of all, I will be introducing the management attending today's conference. There we have the General Manager, CEO, Mr. Jiang Xing from ZhongAn Online. We have the CFO and the Chief Investment Officer, Mr. Li Gaofeng; and we have Wayne Xu, the CEO and President of the ZhongAn International.

All right. Thank you very much, everyone. Good afternoon. I am General Manager of ZhongAn Online. My name is Jiang Xing. I want to thank everybody to attend today's conference of ZhongAn Online 2025 full year results announcement. Also express my gratitude for your continuous attention and support of ZhongAn. 2025 marks the 12th year since ZhongAn's inception. In traditional Chinese culture, 12 years constitute a full cycle, representing a complete round of growth and development. Looking back at this milestone, we have always taken a long-term relationship and vision as our yardstick, anchoring the core goal of compound growth and keep forging ahead diligently in the insurance technology sector. In particular, since we achieved the first profitable listing in 2020, the past 5 years have witnessed a dual growth in both scale and efficiency of ZhongAn. Also the data shows the transformation. In terms of the total volume, our GWP has doubled with the self-operated channels growing by nearly 2.5x. And not only this is an expansion in terms of scale but also a rigorous validation of our product competitiveness, traffic operation capability and client service excellence. In terms of quality, our combined ratio improved from 102.5% to about 95.8%, a decrease of 6.7 percentage points. And this particular change and milestone marks the official completion of our underwriting business evolution from stage-to-stage profitability to sustain and sustainability. In terms of the returns, the investment income grew steadily, and driven by the 2 engines of underwriting and investments, our adjusted net profitable -- profit attributable to shareholders surged by approximately 2.3x to reach RMB 1.8 billion in 2025. Of course, behind this number, RMB 1.8 billion lies the accumulation of 12 years of unwavering commitment to our original aspiration and, more importantly, the confidence to embark on a new journey. Behind this compound growth lies the ZhongAn's long-term and unwavering investment in science and technology and even more so, our technological leap from being digital native to AI native. So if we actually look back in the beginning of 2013, we have actually established a very good bound, the first cloud-native financial core system, Wujieshan, connecting scenarios, data and users to complete digital closed loop. In 2018, we scaled the adoption of Knowledge Graph and deep learning through the 2.0 version on ushering the AI augmented era. From 2023 to present, we have built an AI technology mid-platform centered around the other different AIs and also, we have been building a core engine, Lingxi establishing a collaborative system of data flywheels. Also, we do have our own research large language models, math and AI agents as well. This marks a comprehensive advancement from AI augmented to AI native nature. We are firmly advancing the One AI strategy to build a deep closed-loop featuring the data foundation and driven and full scenario implementation. At the underlying layer, relying on a massive data of nearly 100 billion insurance policies and 500 million customers covered and a multi-modal corpus of over 10 million techs, we have forged an irreplaceable core barrier of competitiveness. At the middle layer, we have the Lingxi as our core engine and realized the centralized supply and large-scale output of AI capabilities through the context-based engineering, agent skills and data flywheel. At top layer, AI capabilities are now fully integrated into the entire business chain, including product design, the marketing, customer acquisition, underwriting and the -- also business approval. So at the present time, we have some of the data to share with you. For instance, we have 220 active robots and more than 1,000 AI agents with over 2 billion times large model course and at the same time, over 3 trillion token consumption throughout the year, enabling technology to be deeply embedded and integrated into our business. So on the full value chain of insurance, technology is now becoming more value and valuable and value generatable. So more importantly, the overall value of One AI strategy has been translated into efficiency and experience, ultimately crystallizing into tangible business results. On the product front, AI has significantly accelerated the pace of the business development and iteration, enabling us to capturing the market demands more accurately. On the customer acquisition front, AI achieved a full scenario coverage and markedly improving the material production efficiency and effectively reducing customer acquisition overall costs. On the underwriting front, AI drives the simultaneous improvements in the automated rate and recognition accuracy and balancing the risk control as well as risk efficiency. On the service front, AI expands the service scope of customer service and delivers in-depth empowerment combined with medical scenarios and also, at the same time, on the claims front, AI reconstruct the entire process, simplifying the documentation, automating the review and drastically shorten the turnaround time as well. Meanwhile, we are talking about intelligent quality control and assurance. This has achieved a full-link coverage and also building a solid defense line for compliant and a steady operation of our business. Now let's all together have a review of our operating performance in 2025. In 2025, the company achieved a GWP of RMB 35.735 billion, representing a year-on-year increase of 6.9%. Under the new HKFRS 17, insurance service revenue reached RMB 33.48 billion, up 5.5% year-on-year. Adhering to this long-term quality growth of business, the company's combined -- the underwriting combined ratio stood at 95.8%, improvement of 1.1 percentage points year-on-year and driving underwriting profit up 42.5% year-on-year. While at the same time, benefiting from recovery of capital market throughout the year, the total investment income of insurance investment assets rose 59.1% year-on-year to RMB 2.124 billion. Simultaneous improvements in underwriting and investment segments drove the company's adjusted net profit attributable to shareholders to surge by 198.3% year-on-year to RMB 1.8 billion at the end of 2025. The company comprehensive solvency adequacy ratio further rose to 242%, maintaining adequate solvency. In addition, the company capital management capabilities has been highly recognized by the international authority of institutions. It was assigned as BAA1 rating by Moody's and A- rating by AM Best, with both rating agencies simultaneously upgrading their outlook to positive, fully affirming the company's comprehensive profitability and sustainability of our future earnings. Throughout 2025, ZA Bank maintained a very strong growth momentum, driven by the rapid growth in noninterest income. It achieved a net income of HKD 892 million, a year-on-year increase of 62.7%. Along with the rapid revenue growth and emergence of scale effects and economy of scale, ZA Bank's cost-to-income ratio improved year-on-year and achieved a historical breakthrough for the full year net profit of HKD 17 million. Next, I will introduce our business progress in terms of branding and channels. The channels are a cornerstone of business growth and the brand is actually a very important defending mode for company's long-term development. In 2025, we focus on communication directions of young oriented and scenario-based, continuously deepen our brand positioning through cooperation with more than 150 major sports events such as the Marathons and Suzhou Super League football competition covering over 100 cities and effectively reached the users of diverse areas and continuously enhance our brand public awareness and influence. In terms of the channel operation, we are here to coordinate the development of self-operated channels and ecological partners. On the self-operated and proprietary channel side, the GWP reached RMB 7.557 billion in 2025, accounted for 21.1% of our total premium income. Among them, the number of paid users of self-operated channels was 7.9 million, and per capita insurance policy volume increased to 1.9. The average premium per policy was RMB 505. User payment conversion and stickiness remains steady. The proprietary channel has already become an important independent driver of the company's business growth. Meanwhile, we have continuously deepened our ecological and ecosystem corporation. At the current stage, we have more than 300 ecosystem partners, among with 33 partners contributing premiums of over RMB 100 million, and through, the in-depth collaboration with the leading partners in the various fields, we have continued to expand business boundaries and cover relying on the external scenarios. Overall speaking, the steady growth of self-operated channels and coordinated contribution of the ecosystem channel have made the company's channel system more resilient and risk resistant. Furthermore, the sustained investment in branding also provided solid support for channel conversion and long-term user retention as well. Next, I will present the 2025 progress of our various insurance ecosystems. First is the health care ecosystem and health policy ecosystem. We continue to focus on building a multitiered product portfolio through a high-quality, high-growth development of this ecosystem. The GWP rose 22.7% year-on-year, covering 29.34 million insured with the average premium per user of RMB 613. On the product front, supported by our 2 core brands, the Zhong Min Bao and the Personal Clinic Policy series, we have built a comprehensive and wide-ranging production system. The Personal Clinic Policy series has continued to deepen the presence in the standardized health insurance market with a premium volume of reaching RMB 8.3 billion. As the benchmark in the medium level medical insurance, we are now expanding to areas like critical illness, outpatient emergency care and mid- to high-end medical treatment fully meet the diversified needs. Zhong Min Bao series focused on nonmedical underwriting scenarios, achieving a high-speed premium growth of 456.1% and become an important supplement to the inclusive health insurance. On the service front, in this ecosystem, we have simultaneously perfected the insurance plus medical service as a closed-loop system, integrating end-to-end services such as health management, Internet hospitals, direct payment and advanced settlement and offsite pharmaceuticals and medical devices. Altogether, we have partnered with 183 private hospitals and 33 rehabilitation institutions, driving the transformation of the insurance from post-instant claim settlement to full cycle health protection and continuously consolidating the core competitiveness of the health ecosystem. Next, I'd like to talk about the ecosystem of digital lifestyle. We took initiative insurance products as the link in 2025 to deeply connect it with the upstreams and downstreams of industrial chains of consumer industry. In 2025, the GWP of this ecosystem reached RMB 15.973 billion, of which the total premium of innovative business was RMB 6.568 billion, a year-on-year increase of 37.2%. And here, our focus on introducing our core innovative business, which is our pet insurance. Relying on a continuous expansion trend of pet industry, ZhongAn pet industry achieved a year-on-year increase of 88.2% in total GWP in 2025, reaching RMB 1.296 billion. The product covers the full risk scenarios, including pet medical care, critical illnesses, accidents and third-party liabilities as well. On the service front, we have served more than 8 million pet owners in total and provided more than also collaborations with 18,000 offline hospitals, and we have built a product plus service and 4.49 million claims and health services. And also, we have built a product plus service pet production ecosystem through service such as medical treatment, stewards, direct settlement, et cetera. and continue seizing the dividends of the pet economy amidst consumption upgrading. Next, I will further elaborate on the company's innovations and breakthroughs in the new consumption insurance segment in 2025. So last year, we continued to implement the insurance innovations in the new consumption field, achieving breakthroughs and in-depth development across multiple scenarios. First of all, in the sport area, we continuously built the professional brand image of Sports ZhongAn, deeply integrated into the core scenarios such as marathons and cycling and became a partner of top events like HYROX and Suzhou Super League Football competition, further consolidating our leader edge in sports insurance track. In the low attitude economy sector, we kept pace with the industrial development trends and relative -- related businesses recording a year-on increase of over 20% in our GWP. We maintained strong momentum in scenarios such as electronic products, the household insurance and corporate property, et cetera, and launched our products like Dian Di Bao, providing diversified risk reduction for operation of small micro size enterprises. In addition, e-commerce insurance continued to expand our coverage scenarios and achieving a total premium of RMB 6.574 billion in 2025, fully covering the core risks such as the returns and quality guarantee and ecommerce transaction channel. Travel insurance posted a GWP of RMB 2.8 billion, covering high-frequency demands like the flight delays and hotel cancellations, leveraging in-depth collaboration with the mainstream channels and continuously consolidating our leader marketing positioning. Last of all, I would like to tell you something about our ecosystem of auto insurance. We actively embrace the trend of online auto insurance and new energy auto insurance in 2025 and GWP of this segment grew by 34.6% to RMB 2.76 billion. Also, we have long been firmly optimistic about the development of new energy auto insurance and with the services at the core engine of auto insurance. And in total, we've been growing by 206.2% and year-on-year, currently accounting for 28.3% of our total auto insurance premiums. We have underwritten policies for more than 100 automotive brands and covering all mainstream new energy manufacturers and OEMs in market and launched Zhong Yan Bao, this particular product to specialize address the warranty pain points. And in terms of the business structure, the private car premiums accounting for 87.9% of the total, and we have deeply cultivated the primary care market and also provide a lot of stickiness to the users. And also in 2024, December, the company was approved independently operated compulsory traffic insurance business in Shanghai and Zhejiang Province, enabling us to better meet the users' needs. Last but not least, in the consumer finance ecosystem amidst the external uncertainties and headwinds in 2025, we adhere to the principles of risk control and high-quality development, proactively optimize the business structure and also enhancing the overall business scale. The full year total premium reached RMB 4.3 billion, of course, a decrease from 2024. And while they're actively contracting our business in an orderly fashion, we continuously refine position operations and implemented the end-to-end risk management and driving a steady decline in our outstanding loan balance actually dropped from RMB 27.7 billion at the end of June of 2025 to RMB 17.9 billion by the end of February of 2026. The core purpose of this proactive adjustment is to optimize the asset structure, focusing on high-quality assets and ensure the long-term stable development of our consumer finance ecosystem on a premise of strictly adhering to the risk bottom line, which is highly consistent with our overall long-term strategy. So with that, I would like to conclude the review of the insurance MENA performance in 2025. And now I would like to give the call over to Wayne to introduce the development of ZA Bank in 2025.

All right. Thank you very much, Simon, for this wonderful review. Since its official launch in 2020, ZA Bank has been committed to building a one-stop digital financial service platform in Hong Kong, providing the retail customers and small- and medium-sized enterprises with rich, convenient and inclusive financial services. Also, I'm very thrilled to say that 2025 marks the 5 -- or the fifth anniversary of ZA Bank's opening and the bank has achieved a historical breakthrough by officially realizing the first annual profit-making situation with a full year net profit of approximately HKD 70 million. At current stage, ZA Bank has already emerged as one of the digital banks in Hong Kong market with the most comprehensively functioned and product provisioned. And it is now having also provided the users with a one-stop financial services, for instance, the deposits, loans, transfers, bank card consumption, foreign exchange, et cetera. And particularly in the retail banking business, we have continuously improved the service quality through innovative gamified experience, effectively enhancing user stickiness and activity as well. Since ZA Bank laid out its investment product system in August of 2022, we always take customer needs as the core and steadily building the full strategy investment ecosystem covering funds, foreign exchanges, U.S. stocks, cryptocurrency and Hong Kong stocks. Also, we have successfully driven the growth of diversified noninterest income and build the company's second curve for the growth and development. On the product front, we have collaborated with the top global fund companies to launch more than 170 public funds, and through the fully facilitated foreign exchange conversion service, we can significantly lower the investment threshold for users and giving them more conveniences. In terms of transactions, we have continuously iterated and innovated. In February 2024, we took the leading launch in the U.S. stock trading. In November of 2024, we completed the upgrade of SFC Type 1 license becoming the first digital bank in Asia to provide cryptocurrency trading service for retail users. And in October of 2025, we have launched the Hong Kong stock trading business and introduced the first of its kind stock-backed stock consumption rebate program in Hong Kong. And this year, we have added the service as IPO subscription, continuously enriching the Hong Kong stock investment scenarios and enhancing our user experience. Now with the continuous improvement of our investment product metrics, the asset scale of investor customers has been steadily rising. Not only this confirms the market high recognition of ZA Bank's investment service, but also highlights the differentiated competitive advantages in the retail finance sector driven by technological empowerment. Looking ahead, we will continue to rely on our core technological capabilities to iterate the investment products and services and further amplifying the growth momentum of noninterest income and create more sustainable, valuable returns for our shareholders. Last but not least, let's take a look at the core operating data of ZA Bank in 2025, not only we have achieved the first whole year profit making, but also saw high-quality growth in various operating indicators. In terms of the total scale, the total asset increased by 11.3% year-on-year to HKD 24.853 billion, and customer deposits rose by 14.7% year-on-year to HKD 22.245 billion, with business scale expanding steadily. The net income increased by 62.7% year-on-year to HKD 892 million, driven by the wealth management business, the noninterest income further grew by 278%. With the continuous improvement of the economy of scale and operating efficiency, the cost-to-income ratio improved from 109% in 2024 to 78% in 2025, ultimately achieving a net profit of approximately HKD 17 million and successfully turning losses into profits. In terms of capital, the capital adequacy ratio increased from 23.1% to 24.3%, maintaining sufficient and stable capital level to provide guarantee for further development. The profit breakthrough of ZA Bank has confirmed the feasibility of our digital banking business model and opened up the space for long-term development of the group's financial innovation segment. Now I'll give the floor to Gaofeng to share the financial performance in 2025 with all of you.

Thank you very much, management, for your introduction. Now I will be responsible and introducing to you the overall financial performance in 2025. In 2025, the original premium income of the P&C industry grew by 2.6% year-on-year against the industrial backdrop. ZhongAn sustained a steady growth outperforming the industry. The GWP increased by 6.9% year-on-year to RMB 35.735 billion. The growth momentum was mainly driven by the dual engines of health insurance and auto ecosystem. By ecosystems, health insurance ecosystem led by dual brand matrix of Personal Clinic Policy and Zhong Min Bao, with all the continuous new product launches achieved 22.7% year-on-year increase in the GWP to RMB 12.628 billion. The impressive performance fully demonstrates the strong market competitiveness of our multi-tiered health insurance product portfolio. Digital lifestyle ecosystem recorded the GWP of RMB 15.9 billion, slightly decreased by 1.4% year-on-year, mainly affected by contraction of overall return shipping insurance industry. However, the company's market share in the sector remains stable. Innovative business such as pet insurance achieved rapid growth, injecting new vitality into our ecosystem. The consumer finance ecosystem facing the complex and volatile external environment would adhere to the prudent operational philosophy proactively optimizing the business structure and scaled down the business volume. Premium decreased by 10.6% year-on-year to RMB 4.32 billion, upholding the bottom line of high-quality development. Last but not least, the auto insurance ecosystem, we precisely seize the opportunity brought by improving market sentiment amidst the industry online development trend, actively embrace the policy dividends and growth opportunities of the new energy industry -- auto industry. Following this trend, we had a GWP of RMB 2.76 billion for the auto ecosystem, representing sustainable year-on-year growth of 34.6%. Under the new HR IFRS 17 standard the company insurance service revenue reached RMB 33.485 billion, a year-on-year increase of 5.5%. By ecosystem, the health ecosystem saw a year-on-year increase of 24.6%. Digital lifestyle ecosystem experienced a year-on-year decrease of 9.1%. The consumer finance ecosystem grew by 6% year-on-year. Auto insurance ecosystem achieved year-on-year growth of 28.4%. In 2025, benefited by the company's consistent strategy of quality sustainable growth under the new HKFRS 17 standard, our combined ratio improved by 1.1 percentage points to 98.5% for underwriting, achieving underwriting profitability for 5 consecutive years. Among them, the combined claim ratio was -- or loss ratio was 38.7% and combined ratio was 57.1%. Across our 4 ecosystem, the combined ratio of health ecosystem actually decreased from 95.7% to 92.1%. This improvement was primarily driven by the 6.7 percentage point reduction in expense rate. And with the stem from our comprehensive integration of AI to empower the health insurance operation efficiency and marketing efficiency. Loss ratio of the health ecosystem stood at 42.1% representing a 3.1 percentage point increase compared to the same period in 2024, mainly due to optimizations and adjustment of our product metrics. The lifestyle ecosystem maintained a stable combined ratio of 99.9%. The minor movements in loss ratio and expense rates were driven by the adjustments of internal product metrics. The overall business operation remained steady. The consumer finance ecosystem posted a combined ratio of 97%. Rise in the loss ratio was driven by volatility in underlying asset quality amidst the external environment changes, but we have maintained a very sound risk management, over risk remained under control. The auto ecosystem further improved the combined ratio to 93.1%. The overall loss ratio rose by 1.7 percentage points to 69.2%, mainly a normal structural change driven by the increased proportion of our new energy auto insurance and compulsory traffic insurance business and the overall claims rate level is manageable driven by AI-enabled refund operation efficiency and strictly implementation of premium convention commission on unified reporting, the requirement for the expense control, our expense ratio decreased by 2.8 percentage points year-on-year to 23.9% effectively offsetting the mid-rise in loss ratio. Overall speaking, continues improvement in combined ratio has further strengthen the company's underwriting profit base, which is a direct reflection of our adherence to long-term business philosophy. Finally, take a look at investment performance. In 2025, the company's domestic insurance investment income surged, providing strong support to growth of overall net profit. In terms of returns, the total investment income increased from RMB 1.335 billion to RMB 2.124 billion in 2025. The total investment return rate rose from 3.3% to 5.3%, while the net investment return rate stood at 1.9%. In terms of the asset allocation level, the scale of domestic insurance investment assets reached RMB 40.3 billion at the end of 2025. We're here to fixed income plus allocation strategy with the fixed income assets accounted for 70%. Meanwhile, approximately increased allocation of equity assets from 6% at the end of 2024 to 9% at the end of 2025, effectively seizing opportunities in the equity market achieving synchronized growth in investment income and asset appreciation. In 2025, the Insurance business segment surged steady development with increase insurance service revenue and the numerous uncertainties on the external environment, the company demonstrated strong operational resilience and has delivered the underwriting profit of 5 consecutive years since 2011. Meanwhile, the profit of insurance business segment surged by approximately 180% year-on-year in 2025 fully reflecting the robustness and the risk resistance of our insurance business profitability. It is worth mentioning that ZA Bank achieved the full year profitability successfully 5 years after the launch, marking historical breakthroughs that validate that digital banking business model in the market. Meanwhile, Technology segment also maintained sustainable profitability, further consolidating the pattern of synergistic development across multiple business segments. In addition, in 2025, in accordance with the accounting prudency, the company has carried out a valuation adjustment on its holding in ZA International and recognizing an impairment loss. It is noted that this is a one-off nonrecurring and noncash accounting adjustment, which does not affect the company's operating results and long-term financial performance. On the capital front, the company has maintained ample and sound capital levels to lay solid foundation for long-term development. At the end of 2025, the company's comprehensive solvency ratio reached 242%, and core solvency ratio reached 235%. With those indicators rising quarter-by-quarter, all financial indicators remain healthy and stable, fully demonstrating the company's strong risk resistance capacity. In July of 2025, the company successfully completed a share placement of approximately USD 500 million, further strengthen the core capital and optimizing the capital structure. In January of this year, we actually repaid all of the remaining U.S. dollar bonds and effectively reducing financial costs and providing solid capital support for our subsequent business expansion and strategic implementation. Looking ahead, we will remain true to the original aspiration and pursue progress and a steadfast determination taking technology as a core engine and deeply empower the entire insurance industrial chain and identify fully meet the needs of our customers. And also, we firmly believe that with the ZA, forward-looking strategic layout, profound technology foundation and innovative volatility, we will surely explore broader prospects on the part of deeper integration between insurance and AI and create a new paradigm for industrial development. On behalf of the company's management, I would like to express my sincere gratitude to every user of the ZA Bank and also ZA Online, and thank you for your long-term support and trust. Also extend my sincere appreciation to all investors and us for consistent attention, trust and company. Going ahead, we are going to continue to create greater value. Thank you very much for the introduction. Now we are going to open up the floor to the Q&A.

[Operator Instructions] The first question comes from Mao Qingqing from CICC, please.

I am Mao Qingqing from CICC. First of all, congratulations on such a wonderful profit, and this is actually quite good. So I have actually 2 questions with regards to the insurance business. The first one is about the health insurance. We all know that in recent 2 years, be it the regulators and the Hong Kong's regulators, they've been actually having a lot of policies promoting the development of health insurance. So I would like to ask the management, how do you actually think about the trend and also for ZhongAn, what are the business advantage that you have? The second question is about the pet insurance. We are very glad to see that starting from scratch for pet insurance now, you do have the total premium size of about RMB 1 billion or so. So would you provide a further outlook to us? At the current stage, market share will be really very high. So my question to the management is that for the pet insurance business, what it's about the market potential in the future? What is your target in terms of your profitability and the profit margin as well?

Right. Thank you very much, Mao Qingqing for this wonderful questions. Thank you very much for your encouragement to our team. And thank you for your attention and trust to pet insurance and health insurance. I believe that this is the very important driver for us to develop further. Let me answer the question about the health insurance. Actually, we have a mission of Healthy China 2030, and we pay attention to the implementation of this mission statement. In the industry of health insurance, there is a large room for further development. Also, there has been upgraded from a supplement to the social insurance all the way to a multi-system of production. And we do see more synergistic effects coming out. In 2025, for the total volume of the health insurance segment, it was almost close to $1 trillion. So we were pretty much optimistic about this. In health insurance segment, ZhongAn has been servicing the customers of 130 million users for 11 years already. We have several advantages that I would like to share with everyone. The first point is about the product innovative capabilities. Now the personal clinical policy has been there for 10 years and still quite sticky among the customers. In the recent 2 years, we have also a very good product of Zhong Min Bao, which is covering a wider population of insurance like those people with chronic illnesses and emergent care needs. So I believe that this is in line with the inclusive finance as a mindset. Also this is pretty much welcomed in the marketplace, especially for the medium to high-end series of Zhong Min Bao. We do have a tailor-made capabilities according to the individualized needs. And just now, we've been sharing with you already the financial figures. That means now we have the Personal Clinical Policy series, targeting the health insurance and the Zhong Min Bao has a very important supplement. And this is actually dual wheel, flywheel engine. So the second point I would like to say is that talking about the full chain advantage of our product matrix at current stage. For ZhongAn's medical service, we have integrated that into the whole insurance business. Now we do have actually the management of the treatment and the diagnosis as well as the other services. At the same time, we are actually providing a lot of support for the patients to get the access to some of the branded name drugs. So this year also, we are now incorporating some of the hospitalization-related expenses into our productive items. So we are now going to have a fuller coverage from a guarantee of service all the way to the available drugs and treatments. And third point I would like to say is that we have a very good technological empowerment capabilities. We are now making full use of the large number of data from our customers and also analyzing upon them. So we could actually have a very good product design and covering from underwriting to claims until the afterwards. So we do have AI technology empowering this to realize our product sales growth so that our business is growing on a sustainable fashion. In the future, for health care industry, this is the area that we want to actually develop more products. At same time, we do want to have more products and covering a wider population. So third is that we want to actually enhance the user experience. So the second question is about the pet insurance. As for pet insurance in the past several years, this was actually developed quite well and smoothly. So we are really looking forward to the beautiful future, and we are optimistic about this. And that is exactly the reason why we have joined this particular area. Now for the pet insurance economy here in China, this is actually becoming very vital continuously and vivid as well. So now you can see that we do have a lot of pet owners. So in terms of the total premium increased a lot. Now we are also reshaping people's awareness of consuming on the pet insurance. So we are now pretty much focused on the mature market. And I do believe that there is a lot of room for further improvement, so this potential is still quite charming. So I think that at the end of the day, behind the different insurance products, right, we do need to actually, first of all, manage the health care ecosystem and altogether helped to build the complete service provision capabilities. And altogether, we are connecting with the upstreams and downstreams of the whole industrial chain and also, at the same time, helping the users of enjoying the conveniences provided by us and also excellent services provided by us as well. At current stage, for pet insurance area, we are now focusing on critical illness policy. At the current stage, we are still nurturing the customers' mindset and doing innovations on products. I do believe that by having more innovations of our products as long as that this is an innovative method that we are quite believing, we really hope that we are going to increase our business and really benefit more pet owners and insurers. So we will show the final economy of scale while we're improving the scale further.

[Operator Instructions] Next question comes from Michael Li from Bank of America.

I am Michael from Bank of America. I have 2 questions. The first question is about the premium growth. I'd like to know that in 2026, since the beginning of 2026, what is the situation for the premium growth? And what is the major driver or drivers behind? And what is the whole year target? My second question is also something that you have mentioned during the script that related to AI. In recent months, we have realized that AI is profoundly impacting a lot of other sectors and industries like the U.S. and Europe and in China as well. So we would like to ask you that as a frontier, tech and AI insurance company, how do you think about the pros and cons of AI?

Thank you very much for that question. In 2026 whole year, the GWP growth actually is quite close to our annual target. The overall growth rate is outperforming that of the industry, 10.7% growth rate. So in total, in the whole year, we will focus continuously on the other core products like the health insurance, the pet insurance and auto insurance, which are giving us long-term acquisition and long-term value acquisition and creation. So in the external environment, we're having a lot of pressures. So we are still in the whole process of becoming more optimized and of course enjoying benefit in the short term. And of course, you can see that our GWP could be actually maintained at a high level and still achieving growth. And my colleague will answer the second part of the question.

Right. As for AI, this is actually developing quite steadily. As for ZhongAn, this is a challenge. But of course, we, as an AI-native insurance company, we believe that we have opportunities. Since the beginning of our inception, we kept exploring the value of AI to or technology to insurance. In the past years, we were actually investing more into this particular area. And last year, most importantly, we will actually provide a very good implementation of AI into our insurance scenarios. We will actually encourage more people. For instance, the particular mid-platform of Lingxi and also I believe that this has also helped us to achieve a lot of achievements already. So we have several principles. The first is that we are always a very important technology innovator, also allocate resources according to the value generated by that AI technology. The second point I would like to say is in the past 1 year, an important thing is that for some vertical small models that we have launched, we had a lot of breakthroughs and progress. So you can see that has already covered around 50% of inquiries. At the same time, in terms of the AI application, just now I have already given a lot of thorough and detailed introduction. So on AI, this is an unwavering strategy that ZhongAn is taking on. So for ZhongAn, I do believe that there is a big opportunity lying ahead of us, and we have to seize that. Thank you.

Next question comes from Rick Zhao from Morgan Stanley.

I am Rick Zhao from Morgan Stanley, the analyst of the Insurance segment. Congratulations on wonderful growth. The first question is about the ecosystem of lifestyle, digital lifestyle. We know that what is the overall competitive landscape of this area in 2025? And how do you think about the overall premium growth and profitability in 2026? And my second follow-up question is on the science and technology side. So in the past, you have been investing a lot into this? And do you have any changes in terms of investment trends or directions or whether there is actually very sound return on investment for science and tech area?

Thank you very much for your question. Let's actually talk about the digital lifestyle ecosystem. As for digital lifestyle ecosystem business, now we have pet insurance and this year, also, we do have other innovative businesses, for instance, e-commerce insurance, the travel insurance and flight insurance. Now we are already having a diversified ecosystem. Now this year, we will further deepen the other innovations like pet insurance, except for pet insurance, we're also going to develop a lot of other sport exited insurance, the home property industry insurance and some of the other like property liability policy. So in total, we are now developing a lot of protective, risk-protective product and further really want to benefit the users in this area. Also covering more live streams and short video and the other new scenarios, also doing a very good exploration of the new point of growth, while in the whole process. We always focus on the sustainable innovation as a core standard. So not only this has something to do with the digital lifestyle ecosystem, but with the whole insurance business. Comparing with the digital lifestyle ecosystem, which is quite stable for consumption, finance, we will actually make a further risk control. From a data standpoint, in 2025, we can see that we have a very good business already. And also the debt outstanding liabilities has been significantly reduced. So I do believe that this is actually much better than our expectation. And also we have some kind of compensations available. So we will have certain adjustments in 2026. We're going to further deepen our strategies and further contract the quota kind of scale. And by using AI, large language models on the risk control, we will definitely seize the opportunities to grow ourselves. As for AI, Simon will be answering this to you.

Thank you very much for this question relating to AI. I would like to share with you my opinions on AI from a different angle. As an insurer, AI is not a disruptor, but a very important enabler. Like lifestyle and lifestyle service provision and cost reduction and the other areas, AI is of great use. Also in terms of this guarantee of the product risk, we will promote the healthy development of the whole industry. As for the consumers, AI is going to be helping us to disseminate the imbalanced information and on equity. Also, this is going to be our future focus. So while the economy is getting recovered, right, I think that at the end of the day, those companies could actually change from the technology to the real task and making profit out of it will be the final winner. As I have already talked about the AI technology just now, we actually have already enjoyed a lot of benefits from this and with the best value for money. So from this standpoint, the AI implementation is vital. This is not only about the implication and application of a technology or an application, but also we are talking about this particular further bringing new technologies into this field. So at the end of the day, I think that we need to restructure ourselves. So if you want to actually do the business with AI, this is also critical to work with it. So in the future, we will always regard AI as a core capability, not only a simple tool that we use. While everything is compliant and risk controllable, we will do further investment. And AI will help us to actually enlarge the team's value, and we will actually seize the opportunity of AI era and bringing with us a lot of benefits, but still sometimes activities or new possibilities. So our bottom line is operating everything in a compliant way and also at the same time, it will develop ourselves on the faster track.

Our next question is Wang Dan from JPMorgan.

I am Wang Dan from JPMorgan. I also have 2 questions. The first question is about the auto insurance. In the past several years, we all know that there is structural change of your product and focusing on more high-value vehicle models. I would ask you that in terms of this new energy vehicle, when the penetration rate is getting higher, how does ZhongAn is going to make full leverage of your technological advantage so that you are going to build a very good competitive edge that is differentiated from the other insurers. And second point is that as you have mentioned on PowerPoint that in the future, you're going to do a lot of other businesses. So do you have any time table in place? When are you going to expand that business to more provinces? And second question is about the shareholder return. We understand that in this fintech area, you are maintaining the order and advantage, but you need to invest a lot in order to develop your business. And we have noticed that there is a stressful situation for the share price and the PE ratio was less than 1x. So we would like to ask you that at the current stage, it is quite stable for the others and quite robust. So I want to ask you that whether or not the management is considering that when time allows that you are going to consider any kind of a share buyback?

All right. Thank you very much. Let me actually answer the question relating to the auto insurance as a question. First of all, auto insurance is something that we are going to focus as a strategic focus. The very first point I would like to say is we are following closely the development of the digital and Internet-based auto insurance market. But still the penetration of this application is still quite low. In total, RMB 900 billion as a volume of GWP, but only like less than 5 is covered by the online platform, so quite potential for the further growth. Of course, if you're talking about the continuous enrichment, this year, we are enhancing our core competitiveness, but still, we always want to make sure that science and technology is everything that we build our competitive edges. And also it is very important for us to have a sustainable development plan. At current stage, we are using the full online technology to actually do this auto insurance business, and this is quite unique to ZhongAn. At the same time, we are optimizing the user experience for instance, in an asset-light fashion and high efficient fashion, we're operating our business. At the same time, in the area of new energy vehicle auto insurance, we're now searching for more collaborations with the OEMs of vehicles and doing more innovations on the product manufacturing design. So in the future, we hope that we could stay further on this and really build a business development model that is having a very good competitive edges in this industry. So last year, we actually have tried in Zhejiang and Shanghai, the first step. In the future, we hope that we are going to gain more support from our regulators and hopefully covering more promises and cities for the auto insurance business. Of course, I do believe that the current stage, the government has given us a lot of support, and so does the regulator.

I would like to answer the question about the capital market. Recently, we adhere to the quality growth strategy. In recent 5 years, the GWP volume and the profit all doubled. In the future, we will further focus on the branding and the AI embedding and integration, providing more services, helping our customers to expand as well. So from a business competitive standpoint, we're going to remain robustness and still sufficient and ample solvency ratio. So we always want to actually provide those tools to help us to enhance our efficiency. Whether we consider any buybacks? In 2025, actually, we have just performed an issuance additional of USD 500 million. So in the future, we will actually do more independent operations, for instance, the AI virtual currency and also for some of the other areas like pet insurance or some of the other insurance policies. So for ZhongAn, we are going to position for a faster growth. But in terms of the controllability, we have a very good profit margin. So we hope that while the capital is sufficient, we are going to be on the fast track. So actually, in the short term, we don't have any share buyback plan because we're going to hit a higher bar.

The final question comes from Charles Zhou from UBS.

I am Charles from UBS. So I have 2 questions. The first question goes to Wayne. We know that for the ZA Bank and the digital banks in Hong Kong is a leader. And in 2025, you have already realized the full year profitability. So I want to ask you that on top of the profit-making situation, do you have any other operating targets in terms of the strategies and thinking? My second question is about the investment. So in 2025, I believe that the overall submarket performed quite well. So I would like to ask the management that what are the investment opportunities that you have witnessed in 2025 or in 2026, would you talk about more the bonds and equity? How do you think about the liability bond? And what is the interest rate? And do you have any preference? And also for equity, I would like to also ask you that how that you are going to actually balance this particular kind of higher stock dividend? And how do you think about the stock market versus the fixed income market?

Right. So let me answer the question relating to the event. First of all, thank you very much, Charles, for your confirmation about our business performance. So in total, in 2025 for ZA Bank this was actually quite shining. So in the past 5 years, we actually deeply rooted in the Hong Kong market in terms of the product innovation and service provision and this was the natural result. ZhongAn ZA Bank actually always serve the global Chinese background people. And this is going to be our core mission. We hope to actually cover the Chinese people in more areas in terms of account opening, the financing and wealth management as a whole. So actually, in terms of the business, I mean, the user volume, not only we are going to actually realize that, but also we are going to actually have new products as well. So be the product experience or some of the others, we hopefully, to increase the activity of the users. Also, we are going to increase the number of active users against the total number of users, also trying to optimize cross-selling efficiency of different products. At the same time, while we are increasing our efficiency, we are going to build the brand awareness more into the users' mind and gaining more high-quality users. On the product front, we are going to enrich the product metrics further, especially in the financing area. We do have the U.S. stock, the Hong Kong stock and fund trading availability, but we are going to expand further the boundary in order to have a closed loop of wealth management to investment. And so ZA Bank is also going to help to drive more profit as well. We have provided some of the new trading system last year are quite good in terms of feedback. And also this year, we have also new features in terms of the Hong Kong stock market IPO. So we are going to continue this year and keep the momentum of this kind and further promote the overall growth of not only revenue, but also the profit as well. So be it the number of the users that we are servicing or the quality of the services, we are going to reach to the most excellent level, right?

With regards to the investment, I would like to answer that. So in the overall allocation, strategic reallocation, we always take on the fixed income plus as a strategy. We always want to have a very stable return and also have certain allocations to some kind of other assets to have a very good balance of the risk base versus the fixed income asset. So in 2026, this is going to be as prudent as 2025. For instance, while the macro economy is actually getting kind of quite good. We will have different strategies. And second is that we control systematic risk a lot and actively would like to know and also manage the excessive return. And for the bond investment, we focus on those high trust kind of products with -- on our portfolio, we have 98% of the products with the rating of at least AA. And when the interest rate is getting higher and higher, we are going to actually getting lower the stock dividend and managing our investment strategies in a more flexible way. So I do believe that this is actually relatively stable and also quite high than the fixed income. So this is pretty good. And in terms of equity. So in total, we have a very good opportunity of the market. So all the way until the December 31, 2025, we are now increasing all the way to like about 90% also of our equity and quite good optimized. In 2026, we are going to keep on this particular trend and also making sure that in between the bond and the equity, we are going to have a very good balance in between. And in 2025, we are now focusing on some of the growth segments. And in 2025, we will further actually focus on those kind of a balance of the growth-oriented and higher stock dividend-oriented products and portfolios.

Thank you. Thank you very much. This is the end of the announcement. And thank you very much for participating in the conference on behalf of the company, right? So hello, everyone, and you're now able to be disconnected. See you next time. [Statements in English on this transcript were spoken by an interpreter present on the live call.]