New China Life Insurance Company Ltd

SSE:601336

Earnings Call Transcript 2022-Q2

[Xingfeng Gong, executive]

Ladies and gentlemen, good afternoon. Welcome to attend New China Life 2022 Interim Results Announcement. I'm Vice President, Chief Actuary and Board secretary, Gong Xingfeng, and the host for today.

First, I would like to introduce the managemental team of New China Life. They are CEO, President, Mr. Li Quan; Vice President, Hong Zhang; Vice President, CFO, Yang Zheng; Vice President, Zhigang Yu; assistant to President. We also invite 3 independent directors to turn online. They are Mr. [indiscernible] Li, Mr. [indiscernible] and Mr. [indiscernible].

Today, we have 2 parts. The first is results announcement. The second is Q&A session. We will offer simultaneous interpreting for friends. [Operator Instructions]

Next is the results announcement. CEO, Mr. Li Quan, will introduce the overview and the insurance business. Mr. Yang Zheng introduce financials and investments. I will introduce embedded value. Now let's welcome Mr. Li Quan.

[Quan Li, executive]

Thank you. Ladies and gentlemen, good afternoon. Welcome to NCI 2022 Interim Results Announcement. First, I will introduce the business. In the first half of 2022, the company maintained its strategic determination continue to return to the uses of insurance from most business transformation, industrial synergy and a technology employment, enriched protection products, upgraded customer service, optimized by utilization of insurance funds, fulfilled corporate resources. So the national strategy and push forward [high quality] development. As of the end of June 2022, the company pursued progress via insurance stability. GWP was [ CNY 1.25 billion ], up by 2% year-on-year, a steady growth. Renewal premiums reached CNY 70.2 billion, up by 4.8%. Total assets were CNY 1.18 trillion, up by 5.4% compared to the end of [ 2020 ] when annualized net investment yield was 4.7%, up by 0.2 percent point. Embedded value ranged CNY 258.8 billion, up by 0.02% compared to the end of 2021. As for environmental and social responsibility, New China Life always adheres to low carbon and environmental friendly operation modes, applies mobile platform and mobile terminals for customer and order management, reducing paper consumption in traditional marketing model. The company actively showed its social responsibilities [serves] the people's livelihood. The policy-oriented health insurance covered 13.85 million customers in the first half of 2022, rising by 228.8% year-on-year. The company allocated RMB 10.4 million and it supported 11 assistance products. The company purchased agriculture goods and products worth CNY 3.28 million to support rural revitalization. As at June 30, New China Life has carried out public welfare activity for sanitation workers in 158 cities, donated a sum short of CNY 333 billion settled claims with a total payment of CNY 27.6 million. At present, the high insurance business is touching face bottom and ongoing performance transformation. The development environment is complicated and severe in the second half of 2022. In accordance with the business orientation of stabilizing volume and highlighting value, the company focuses on core business, innovative products, improve team quality and take multiple measures to promote high-quality developments. First, launch diversified products. Focusing on customers' needs, the company will strengthen product innovation in key areas, improve product system to offer protection for customers' whole life. Meanwhile, the company will integrate internal and external resources in health care and [old-age] care to expand coverage of products and services. Second, to improve the quality. The company will offer more [put] for high-performing team to improve team quality and productivity, putting in place the high-performing projects, building sales team, future youth, progression and urbanization and explore the transformational testing. Third, strengthened customer management. The company will push forward the broad [SCI] activity, creates more activities to accumulate customers, carry out classified customer management. The company will upgrade the functions, infect customer protection [indiscernible] and improve the service efficiency of testing [indiscernible], strengthen risk control and compliance. The company will carry out risk management and improve risk management capacities. The company will continue to implement the [indiscernible] mechanism and strengthen dynamic risk monitoring to prevent huge risks, enhance the awareness of risk prevention and firmly prevent case risk.

In terms of insurance business, let's be the GWP. In the first half of 2022, under the guidance of stable growth by regulators with spread of COVID-19 in severe and complex markets, life insurance industry went through adjustment. The company [indiscernible] close the transformation market models, launches diversified products, improves service and the technology [environments] and they focus on key transformation. Business was stable. Renewal premiums reached CNY 70.22 billion, up by 4.8% year-on-year, taking up 68.4% of GWP, a solid foundation for rapid premium's growth. FYP from long-term insurance reached CNY 39.4 billion, down by 1.7%, accounting for 38.7% of GWP. Premiums from short-term interest were CNY 2.8 billion, down by 20.2% year-on-year. GWP breakdown by channels. Individual insurance channel realized premiums of CNY 69.5 billion, down by 0.5% year-on-year, accounting for 67.8% of GWP. Bancassurance realized premiums of CNY 31.1 billion, up by 7.8% year-on-year, accounting for 30.4% of GWP. Group insurance channel realized premiums of CNY 1.8 billion, up by 2.4% year-on-year. In terms of individual insurance business, in the first half of 2022, individual insurance channel suffered from COVID-19, and the new business growth was under pressure. With the support of renewable business, individual insurance channel maintained stable premium, working from long-term insurance amounted to CNY 7.8 billion, down by 23.5%. FYRP from long-term insurance business amounted to CNY 7.4 billion. Renewable premiums amounted to CNY 60.6 billion, up by 5.2%. Premiums from short-term insurance reached CNY 1.1 billion, down by 44.7%.

In terms of team building, the company actively explored the transformation of sales team and continued to create agent headcount to build high-quality sales team. As at June 30, agent headcount reached 318,000, down by 27.9% year-on-year. The monthly average number of qualified agents was 61,000, reduced by 41.9%. The monthly average qualified rate was 17.5%, decreased by 1 percentage points. The monthly average qualified productivity was over 3,000. In terms of Bancassurance, in the first half of 2022, Bancassurance channel different cooperation with important partners and it boosted the growth of regular premiums. FYP from long-term insurance amounted to CNY 21.6 billion, up by 10.5%. The FYRP from long-term insurance amounted to CNY 4.7 billion, up by 1.1% year-on-year. Renewal premiums totaled CNY 9.5 billion, up by 2.5% year-on-year. For premiums from major product, FYP, from [participation] insurance was CNY 16.8 billion, up by 12.2% year-on-year. FYP from health insurance reached CNY 2.8 billion, down by 38.2%. FYP from traditional insurance amounted to CNY 9.7 billion, down by 5.8% year-on-year. Next is business quality. 13-month and 25-month businesses ratio of individual life insurance was 84.3% and 82.7%, down by 4.5 percentage points and 3.1 percentage points, respectively.

That's all for the insurance business. Now let's welcome Ms. Yang Zheng to introduce the financials and investment part.

[Zheng Yang, executive]

Thank you, Mr. Li Quan. Next, I will introduce a financial and investment of the company. First, I'd like to introduce the major financial indicators. The total revenues of the company has a slight difference down by 4.8%. There are 4 parts. First is the insurance business. Just as Quan Li has elaborated, and in a difficult environment, the company hasn't -- about 2% increase of the net rent premiums and policy fees by the investment income decreased about 26.8%. Those 2 indicators has contributed to the 4.8% decrease of total revenues. And for the expenses, the commission and broker expenses as obvious decrease -- about 30% decreased and administrative expenses has a slight decrease of 3.3%, which shows that the company has conduct effective measures to control the costs, especially in the difficult environment and to take a full advantage of the financial resources. And for the net profit, the -- it has decreased about 50.8% and invested earnings and wage average ROE attributed to shareholders of the company also see a decrease.

In the next slide, we introduced the investment performance or the investment assets. We can see that the investment assets of the company has surpassed to CNY 1 trillion to CNY 1.14 trillion at 5.3% compared with the end of last year. And annualized total investor yield was 4.2%, down by 2.3 PT. Annualized net investment yield reached 4.7%, up by 0.2 PT.

Next, let's go to the investment portfolios. As an insurance company has over 1 trillion assets in half of a year, the changes are slight, and we have increased the allocation to term deposits and equity investments. Cash and cash equivalents has increased and other classes remains flat, which shows that the company has -- which shows the company's allocation in the first half of the year. And for the net and the assets, the company will elaborate those investment category for the past several years, and unless -- so we are familiar with the company, we'll know that the [net assets] has a higher percentage in our total investment assets, and we have been elaborate -- we have been telling the market that with the growth of the capital market and our allocation of assets [investment assets] has -- will have a decreasing proportion in total investment. As in the first half of the year, we can see the [indiscernible] of the company is flat compared with the proportion in the end of last year. The major changes are that the net and debt investment come to maturity, and there are not a lot non-standard investment in the market. So we have a higher percentage of non-standard equity investment. And the net asset of the company hold -- has good credit, and the credit ratings is high until the asset is secured with -- and with high quality. That's where we introduced the solvency. You might know that in the first half of the year, the company outside the C-ROSS II, which have a major impact on the core solvency margin ratio, which decreased by 97.1 PT to 146%. And the comprehensive margin ratio was relatively flat, it is decreased by 11 PT to 240%. And those changes are only because of the increase of our business and the change of regulation policies.

Next, let's go to Gong to introduce the embedded value of the company.

[Xingfeng Gong, executive]

Thank you, Mr. Yang. Next, I would like to introduce the embedded value. By the end of June 30, the embedded value of the company's CNY 258 million, which is flat compared with the end of last year. The value of the first business is CNY 97 million, up by 1.7% and adjusted net worth decreased 1% to CNY 161 million. And for the analysis of changed or invested value, the major contributor is, they expect the return and value of new business, which contributed 0.8% and 0.9% to EBIT growth. And for the negative factors, we can see it is evident, we have the shareholder dividend payment. And because of the economic external variance, we have an active impact on the EV. This is closely relative to the capital market in the first half of the year. And I believe that you can understand this and for the [way of] new business, the NBV of the company reached CNY 2.1 billion, down by 48.4%. And the VNB margin based on the FYP was 6.6%, and the VNB margin based on [APE] 12.8%. This all for the [indiscernible]. Thank you.

[Operator]

And this is the end of the presentation. Let's go to the Q&A session. [Operator Instructions]

Now let's welcome Mr. [indiscernible] with first question.

[Unknown Analyst]

I'm [indiscernible]. I have 2 questions. The first is about the proportion of single premium in Bancassurance channel. We can see the -- of the FYP Bancassurance channel is stable, the FYP individual insurance. Now the value is behind, how to solve this problem? The second question is about the real estate investments risk. The real estate -- the proportion of real estate in the total investment.

[Xingfeng Gong, executive]

The first question is answered by Mr. Gong Xingfeng. Thank you for your question. The first, Bancassurance channel. Bancassurance channel has some disputes in the market. New China Life emphasize on the role of Bancassurance channel. We hope the Bancassurance channel, we can contact our customers and market our products to our customers. As you can see, the premium growth [inventory] premium in bancassurance channel grew rapidly, but they contribute little to the business value. This is because of the interest of Bancassurance channel. There is fierce competition in Bancassurance channel. The products are nearing short-term products. New China Life have some computation advantages in Bancassurance channel. In terms of business growth, we ranked forefront in the industries. In the first half of 2022, the Bancassurance channel grew rapidly, especially regular premiums. Compared to our industry peers, we have some advantages in competition.

How to obtain business value is our concern, and we also put much efforts to improve value. The Bancassurance channel is an important support, but we also hope to analyze the banks. We will take much more measures to decrease our cost. We also take multiple measures. First is to attract customers and offer the protection for customers. The second is to follow our customers and have customers' potential and offer the protection and diversified products for the customers their whole life. So we hope the wealth management team can complete his job. So we emphasize our single premium and regular premium, new customers and old customers as well as business volume and business value. That is my answer for Bancassurance channel.

The second question is about -- is asked by Mr. [indiscernible]. The company has [indiscernible] liquidity and the risk investment. In fact, if you follow our results, you may know that the newly added at a treasury bonds, local government bonds in the past 1 or 3 years or term deposits, we have sell them, property or real estate projects, because of economic cycle or some risk exposures. But from the short-term fluctuation and long-term investment, the property takes a little part in our investment portfolio. We control the proportion of the real estate projects. So in the direct real estate is [little]. It won't shake our investments return. I don't know your definition of exposure, but there is little risk for the company. In terms of investment portfolio, we have very little risk. Thank you.

[Operator]

Next question comes from [indiscernible].

[Unknown Analyst]

I have 2 questions. First is about the capital market and your investments strategy in first half. The cash market is factual and want to realize the gains and the losses, and how to comment on the second half of the year? And can you elaborate on your investment strategy? The second question I want to ask about the Bancassurance channel. We can see, in the transformation period of the industry, the insurance companies pay attentions to the elite agents. And I want to know your strategy, and how to retain the elite agents?

[Xingfeng Gong, executive]

Let's welcome -- Mr. Yang will answer the first question.

[Zheng Yang, executive]

Thank you, Mr. [indiscernible]. You can see, the -- between our internal core in the first half of the year because of the fluctuation in the capital market and economic market, and we can see the company has less unrealized gains, which is showing in the interim results. And along with that, we can see that the company has cleared some inefficient equity investment to lay foundation and opportunities for the future value appreciation opportunities. And for the second half, it's hard to tell. And to simply answer your question with the short-term circle come to end, we can see the economy. In the last several years, we may see the short-term circle may come to an end. And also because of the pandemic economy and international environment in the second half, we will have a good event in our company and in the country. And the state also has introduced a lot of measures to grow the economy. We think there are opportunities in the capital market and to provide the yield opportunities for the company in the equity investments. And for the debt asset, the macroeconomic policies as well as internal and external environment has impact on the debt allocation. And we will grasp diversified and different opportunities with different yields and risks, and we will allocate the viable and good assets. Just now mentioned that we have allocated a lot of treasury bond in the first half, and also the boundary that has the tax benefits. And we will lay the foundation for our future adjustment of portfolio positions. And we have over 1 trillion assets and the total risk and the medium and long-term yield, it is guaranteed. And in the past several years, we have followed those philosophy, and in the second half, maybe there are different types of market opportunities. We have accumulated capabilities in our bank trading and responding with different market environment, and we are confident that we come provide long-term and stable yield for the company?

And the second question is about the team building. And that's where Mr. Gong will answer this question.

[Xingfeng Gong, executive]

Thank you. Just now, Mr. [indiscernible] has asked the question about Elite team. Yes, the insurance market, the insurance companies pays attention to the elite agents. The team development has posed pressures on the sustainable development of insurance companies because a lot of agents cannot maintain their business results and the performance. There are 3 major words: first is quality, the second is predictable, the third is sustainable. Only good quality can be sustained. The 5-star hotels have a better quality than 2-star hotels, and high-performing agents can bring more business than other agents and that's a common sense. Only high-qualified agents can survive in the market. The second is the sustainable of the market. Every insurance provides service to cover the whole life of the customers, and we have to serve the customers in a sustained way. Only the insurance companies will sustain the team, can provide sustained service and products to meet the demand of customers and which is cost worthy. And for the productivity, either for customers and for teams as well as company development, we have to count on the elite team and high-quality business to support the development. NCI emphasized the team development of elite. Now we can see the industry is trust for me and the country and the industry is [indiscernible] a phasic bottom. And it's hard to stabilize in this pattern and the equity market, it has to go up or go down. If you want to stabilize in one exact number, it's hard. It has to go up or go down.

So to stabilize the team, development is the only way. Now NCI wants to build 3 high team or elite team. We want to take 3 major steps: first, we hope to improve the productivity; second is optimistic structure; the third is to stabilize the growth. Specifically, for the first step to improve the productivity, the agent team is not stable. The potential factor is, the income of the agents is low. The average income of the team is higher than -- if it's higher then other industries will attract agents. And [in our country], it is less. The other countries -- other industries, the agents will go to other industries. And behind the income is the productivity. The high productivity agent stays in the company and is confident about the development of the industry. And for the agents who leave. They are not confident and less sure about the company and the growth of industry. So to improve the productivity is a priority only improved the productivity and training their capability, we can improve the productivity of the agent team to further develop the agency. And the second step is to optimize the structure. In order to optimize the structure, say, we can increase the total agent head count. I think it's not viable. I want to give you an example. If you want to decrease the total agent headcount to optimize the business structure and agent structure, it will result in a transforming status. And for the agent, if you -- if we lose the existing agents, it cannot -- we have to grow the elite agents to support the team. So for the company, we have to grow the number of direct agents and elite agents. Only in this way can we improve the structure of agent team. We are growing our high-performing agents. The premium is from -- premiums worth [indiscernible] period of 10 years where more has decreased, which will lead to the third step of the measures that is, we have a quite development of financial resources, the team and the business growth. And we have a philosophy that when people can go long business, but only a group of people can go stable, and that sure is different from other insurance, from other industries. Only with good measurement, good training can we grow at often rate, of course. And there are a lot of successful examples in the life insurance industry. And to create and build high-quality agents, we have to create and build efficient sales team in the native school. We know that [the volleyball] team of China, maybe the individuals is that compatible than other countries. But as a team, a lot of team members has been collaborated, and they corporate and they defeat the elite football players of other countries. And this shows that how to build high-efficient sales team. We need to unite and to sacrifice.

And the second philosophy is, we have to goes to -- we have to go on the right track and then speed up. We cannot be too worried to build the high-quality team. We have to be clear about the team that in development road, we have choose only on the right road with confidence and patience and with our team training. And we can grow the agent team. The third philosophy is, we have to be practical for NCI. The biggest competitive strength is, in the first step -- in the the first of our model, which is, we are to compete and stress for stable business performance. In the past several years, we have overcome a lot of difficulties and create a lot of victories. So based on this philosophy, I believe to build a high productivity team or elite team, we have to have the following factors. The first is, have the atmosphere for team development. Only on the good soil, [a seed] can grow a lot of fruits, but on bad soil, it have made perish or die. A good soil or atmosphere for development is the foundation for the team and to build an elite team. The second factor is, we have to build a harmonious people-to-people relationship. We know that relationship is basically important. Only with a harmonious relation can the team grow stronger. If the relationship is bad, it will harm the whole team's productivity. And some people may have good morale, and we will have good productivity and atmosphere. On contrary, it will have a bad atmosphere for the team development.

The third factor is to build event. Our culture has benefited others. Insurance is to contribute and benefit people's livelihood. All with this philosophy, we can grow the business and grow the culture of benefiting others. And the fifth is the management of activities. They [indiscernible] well paid those abstract for themselves. Agents who do not -- will not reach a good business performance and agent management is a major factor for the team as high [indiscernible]. The fifth is the -- manager of the team. Only strong manager can grow his current team. In the future, in building elite team, the company will constantly pay attention to training the managers of the team. That's all from my answer.

[Operator]

Let's welcome next question. Next is from [indiscernible].

[Unknown Analyst]

I'm [indiscernible] from [indiscernible] Securities. I have 2 questions. The first is about embedded value. We see the embedded value growth. The adjusted net worth decreased a lot. So what's the reason behind these? What is the expectation of the EV in the whole year? The second question is about team. We have seen the qualified rate decreased a little. The productivity improved. So how can we understand this?

[Xingfeng Gong, executive]

The first question, let's welcome [indiscernible] to answer.

[Unknown Executive]

About the [indiscernible] adjusted net worth declined. In the past few years, the adjusted net worth declined [indiscernible] around over 1 billion. The reason is simple. In the first half of this year, the capital markets fluctuated, but equity investment fluctuated. It has seen decline in the capital markets. So the adjusted net worth declined mainly because of the fluctuated capital market. In addition to the comprehensive income and we can say, the increase in profit, the profit also suffered. The internal, external environment cannot support the great increase of net assets. So the embedded value will remain low throughout the year. That's the difference from our past, but the in-force business growth for New China Life. That means our existing business maintained good momentum and value contribution. So the in-force business is foundation for the growth of embedded value.

The second question, let's welcome Mr. Gong Xingfeng.

[Xingfeng Gong, executive]

You mentioned about qualified rates decreased by 1.7% year-on-year. Qualified rate equals qualifying member. Total member, we can see a decline of qualifying agents. Qualifying agents declined [indiscernible]. We can say strict regulatory requirements, and we claim agent headcounts. In fact, the agents with effective cost is less. So we can see, the qualified agents dropped quickly than the total number of agents. You mentioned the increase of productivity over 20%. Productivity at total premiums as a percentage of the agent, we have 2 factors: the first is about team, the second is about customer. From the prospective of team, high-performing agent is more sustainable than qualified agents. The high-performing agents can do more than 5 or 10 qualifying agents. The high-performing agents contribute more premiums than qualified agents. Secondly, about customer, we have differentiated customers during the past 3 years. In COVID-19, we can see the customers [indiscernible] less -- they are reluctant to buy, to purchase. Their purchase power cost -- middle and higher customers have more purchase power and a purchase willingness. We can see some luxuries or [indiscernible]. They actually increased over 100%. For example, some excellent brands in Beijing, Shanghai and Shenzhen, their selling increased a lot. But for some small stores, they even -- they are even closed. And the insurance market is the same. The big customers buy much more higher policies, their ordinary customer. In the first half of this year, because of the fluctuated capital markets, fluctuating stock markets and the funds, the people's savings increase a lot. So saving increase and insurance products because of the security, liquidity, the choices of some middle and higher classes in the first half of 2022 is the main reason for the increased productivity from the stable, high-performing agents or the contribution of high and middle customers. That's why we can see declined qualified rate and increased productivity. Qualified agent is unsustainable. So we need to increase sustainable high-performing agents. That's why public companies emphasized on the high-performing agents. That's all. Thank you.

[Operator]

Next, [indiscernible]

[Unknown Analyst]

I have 2 questions. First is, this is the first year for the implementation of the 14th 5-year plan. You have 3 projects, including the enhancement of [indiscernible], the technology environment and [indiscernible]. And I want to know your progress and your future steps. And second, I want to ask about the health care industry. And last year, you've issued over 4,000 qualification letters for the residential apartment and I want to know your progress here.

[Xingfeng Gong, executive]

And let's Mr. Yu Zhigang to answer the first question.

[Zhigang Yu, executive]

Thank you for the question. The 14th 5-year plan is important for the company, and the fifth session of [indiscernible] is, meeting of the CPC has introduced a future perspective of the country. And it's an important timing and document for the country to grow to a better place. And the 14th 5-year plan of the company is document that got the company to high quality and sustainable development. And the company has formulated the 14th 5-year plan last year, which has elaborated the map road of the company in the next 5 years. The big picture is that we will further -- we will follow the vision of the company. When we got listed, we will grow our life interest in business and grow both management and aged care and health care industries. And apart from the plan itself, we focus more on the implementation of the plan and we introduced 10 SAP plans, including the distribution channels the actual department, the financial department as well as the products to support the implementation of the 14th 5-year plan.

Within those 4 sale plans, the company has formulated 3 major areas namely the marketing capabilities, the aged care and health care as well as technology environment. Those 23 projects are vital to the future development of the company. And we will further implement the projects. And the Board as well as the management team has constantly follow and promote those 3 projects. And we have established the leaders team with the management members as the leader. And in the first half of the year, we have established the goals, the strategy and the road map for the 3 projects. And at the same time, in the first half of the year, combining with the business performance, we have promote the 3 projects.

And here, I'd like to share the [indiscernible] progress. First, for the enhancement of the marketing capabilities. First, we hope to build high-quality team and featuring use, organization and professional. And just now Mr. Walia has elaborated. And second is about the training of the team. The third is that the customer management capability, which is related to the team development, the fourth is capability of product innovation. Fifth is about the innovation and service.

And we have specific and detailed plans and for those major capabilities. And for the aged care and health care industry, we have formulated the 14th 5-year plan in this regard and more to the industrial layout. And we have formulated the high-level design of aged care and health care business to guide the development of the business. Second, we have formulated a coordinated and collaborative plan for the synergy development of those 2 industries.

And third is, we hope to increase the collaboration synergy for the aged care and health care with our life futures business. And thirdly, for the technology impartment, there are 4 aspects. First, we have 2 agents technology. The second is we emphasize technology to customers. And the third, we emphasized the 2-core business management system, including this is from foreign even insurance and insurance as well as crop insurance. And we have introduced those 2 systems.

And the fourth and fifth is we want to strengthen the data governance and data security. And this for the technology impartment. And for the system to customers and to agents, we have introduced several platforms and coordinate the functions and the registration rate has increased and the -- over 90% of the premiums comes from our online platform, which has seen obvious and average results. And here, I want to say that those 3 major projects is a major part and grow along with our whole 14th 5-year plan. It's a constant work, and we will have ongoing assessment of the project. In the first half of the year, we have formulated the road map and start the different detailed projects and in the second half, we will further implement the 14th 5-year plan. That's all for the answer.

The second question is from Mr. Chang. And Mr. Zhang will answer the second question. First, I like to thank you for your question. And just now you've mentioned the performance of our company in 2 years ago. And first, I would like to briefly introduce the business performance of the aged care and health care of the industry because the 14th 5-year plan has passed the approval -- has been in their profile Board and directors. And under the guidance of the Board and the management team, the company has further implement the 14th 5-year plan and the total goal of the aged care and health care industry is to focus on the individual customers, especially the customer was high individual network.

And we hope to provide the customer demand that they needed, and we hope to expand our customer layout, we hope to provide insurance as well as customers for the customers to provide an ecosystem for the customers to improve the life insurance in the end. And we may say that since 2021, we have promoted the aged care and health care projects. And just now you've mentioned we have issued over 4,000 residence letters, qualification letters to the customers and which is brought over CNY 60 billion per premiums.

And I want to share that in the first half of the year, even though impacted by the pandemic, the team is promoting and taking several efforts to promote the synergy of aged care, health care and the life insurance industry. In the first half of the year, we have issued altogether 353 residence qualification rates, which has brought over 50 meaning premiums. In the last 2 months, we have seen a large increase. And I want to say that in the first half, the residence community in Yanqing district of Beijing has accomplished the bidding, and we have launched experimental marketing, which has attracted a lot of agents and customers, and especially a lot of VIP customers come and visit.

We have received the visits of over 7,000 customers and the -- and which has -- and we also have received the premiums of over CNY 30 million. And we're going to see that in our customers, the individual customer with high individual network has a large potential and demand for insurance products. And the second is for the aged care and health care. In the first half of the year, we have made efforts in promoting the health care. And in the first half, we have the synergy revenues are over CNY 20 million.

Those are the results that we have received. And we are more confident to further implement our aged care and health care plan. And we will further take detailed and consolidated efforts to further broad -- forward those plans. And secondly, you mentioned about the advantage. For NCI, we have taken early steps in promoting the health care and aged care business. And in early days, we have made us many efforts and laid foundations for the development of aged care and health care industry. And the first advantage that the off-line business has seen a systematic layout and in Beijing.

We have Liuheng aged care community, which has been launched and Wuhan aged community also has been open for business. And the Yixiang community for aged people has also been launched in the first half. Those 3 communities are targeting different types of customers. And for Yixiang community, we hope to provide cares for agents and Wuhan communities are targeting for the aged care demand of the agents. So we have provided different and -- different layered service for customers. Second, competitive strength is that we have advantage in our location. So for example, the Liuheng aged care community is in the core area of aging, which is convenient for the relatives to visit the attendees and customers. And also, we provide 24 hours cares in the Liuheng aged care apartment, and they can have on-site and -- service if they need at any time. So we have our advantage in our layout. And as for the wealth health management, we have NCI Rehabilitation Hospital as well as the wealth health management companies. And also, we have 19 health management centers in core cities in China. So we have a wide coverage nationwide.

And on the other hand, the rehabilitate hospital has gained the medical care qualification, which will lay a good foundation for future development. So those are the major competitive strength of our company. And the second is we have a good team -- sales team. Just now Mr. Yuan has introduced that we have over 310,000 sales team so which has a good reputation in the market. So this is our advantage. The second is we have over 30 million customers and explore the existing customers will provide foundation for aged care and health care development. Thirdly is that we have the support of our major shareholders. And first of all, we are a major subsidiaries of China Investment Corporation and life insurance business at NCI as major part as of China Investment Corporation.

We have a good relationship with SSC and China Re, et cetera, and those subsidiaries of NCI can have cooperation in customers which will layout financial for our future business growth. Next is the emphasize of the management team of the company. Just now Mr. Yigong has introduced that we have 3 major projects in our 14th 5-year. One major product is the aged care and health care plan. And this has shown that the CPC committee of the company and the management team of the company has consensus about the growth of the aged care and health care industry, and we have a consolidated and a strong leadership of the management team which I believe is a major competitive strength of our company.

And also, I believe there is another advantage of LCI is that even -- is that, LCI -- currently, we have -- we might be lag behind in the health care and aged care as well as insurance. Maybe we, in some regard, lag behind, but I think it's not real lagging behind. Once we take efforts, we believe it will brought up, we will have the foundation, and we can draw assets from our peer companies and to grow our own business. And with our asserted efforts, we believe for less insurance plus health care and aged care business. We can have the opportunity and the possibility to grow in our 14th 5-year plan period. And those are the major advantages as our company. And besides, I also want to share that in the future development, just now Mr. Yigong has introduced our several plants and for the aged care and health care business. Next, in the future, we hope to, first of all, improve our high-level design to improve our professional management capabilities. And now we are speeding up our efforts and progress.

We hope to grow a high-quality team to build a high-performing management team for the team course. The second is we want to explore our features and differentiated service, just now mentioned, we have our first [indiscernible] community, and we have Liuheng aged care community. So we want to build a standard operating system and management model for future. And thirdly, we hope to leverage on the wealth management and internal external resources.

We hope to grow that and grow this business. And inside the company, we have united efforts and resources, and we have built specified team to grow the health management business, and we have made a research on that, hope to with the foundation of life insurance, so we can grow the health care and support the whole life process management and service for the agents and improve the service and product competition, and we hope to build aged care and health care ecosystem.

And we have made our high-level plan and we want to further elaborate it and promote it. And the second is, we want to speed up our layout in the industry. Now we have a combined model so both lead assets and have assets in the 14th 5-year plan. We hope to build the industry in the North and South East and the West as well as the [indiscernible] and we hope to make exploration activities in the home aged care.

And we hope this will be a direction of our company. The third is, we want to promote the collaboration and the synergy of health insurance and life insurance as well as aged care. We have introduced the multiple products, [indiscernible] products, and we will further innovate product. And lastly, we hope to improve the brand and variability of NCI and to attract more customers. And those are the major business plans in the next steps of our company.

Next question is from Haitong Securities. I'm here from Haitong Securities. I also have 2 questions. The first is the 13-month persistency ratio and a 25-month persistency ratio, the ratios declined. What's the reason behind this? And how to solve this problem? The second is about premium structure. The insurance industry have a high proportion of saving products. But life insurance match pressures in investment and especially at low interest rates. So what does the company think about the spread rate?

The first question, let's welcome Mr. Gong Xingfeng to answer.

[Xingfeng Gong, executive]

About the persistency ratio. The indicators are dropping in the first half of 2022. The persistency ratio is related to sales team and the product structure. And that's also because the market specifically, the sales team suffered the impact from COVID-19. We have less opportunity to contact customers and the service also decreased. So the customers have less awareness of insurance. So we can see some surrender of our policy holders.

The second is about the quality of sales team. In the past 2 years, sales team decreased from the total number, and there is a great drop of the total number of agents. The insurance agents maintain close relationships with customers. So the drop of the number of agents will lose some customers and which result in the decrease of persistency ratio. And there is some self-insured policies or some misleading marketing behaviors that will affect a lot about persistency ratio. So the decline of persistency ratio of the company is similar to our industry peers. Industry peers also saw decline of persistency ratio. In the first half of 2022, the 13-month persistency ratio is about 83%, 25-month persist ratio is about 82.7%. This is a high persistency ratio. And the industry peers dropped by around 3 to 4 percentage points. And we emphasized on this problem, we take multiple measures to improve our persistency ratio. The first is to stress on KPI. The indicator of persistency ratio is linked to our business adjustments and the management assessment.

We will monitor the persistency ratio and keep our eye on the management team of our branches. The second is to strengthen team training. We may see this quality program from LH -- from the internal and external agents. Third from the early morning, to the process, we will improve the business management measures. The fourth is to focus on the distribution channels and the products. We will take multiple measures to treat the symptoms and the routes. At present, this is because the distribution channels, the [indiscernible] channel maintained good persistency ratio. And for the product, and this is because of the critical [indiscernible] products. So focusing on important channels, products and the self-insured policies or the mutual insured policies, we will strengthen our management to improve our persistency ratio. That's all.

The second question is answered by Mr. [indiscernible]. For the seating product, the -- as the capital markets declines in this program is important. From the first half of 2022, the fluctuated investment market including the foreign market. We can see a great fluctuation in interest rates and the impact of inflation, a great impact on the macroeconomic policies compared to other industries, life insurance industries, we'll see the long term, the future spread rate. First, we need to focus on the customers' needs. The insurance industry is closely related to the customers' demands and the wealth management products.

So how does life insurance industry English is an advantage and over the products for our customers. So the customers' demands for long-term investments increased. So the long-term saving products, pension products and whole life insurance products saw great growth and development. In face of these difficulties, how to support this market is important, focusing on saving products and long-term protection products, the company will emphasize and achieve good growth on the premiums of controllable risks. For the long-term risks, the interest rate risks are prominent we have to build excellent risk management in terms of product development.

And we have to offer the pricing rate instead of extreme pricing for our product. In terms of marketing we cannot attract our customers by the interest rates. We must avoid misleading marketing. We must avoid to increase our liability cost. So the specific measures are as follows: the products, we must have our line. And we have to control risks in terms of assets. From the past 10 years, our investment return are good despite the decline of interest rates and the pressure from capital markets, but insurance funds will have excellent return and control the risk of interest rates. The company carry out starting on asset liability management. We hope, based on effective asset liability management, we hope we can make a balance between assets and liabilities. We want to manage the interest rate stress dynamically and sustainably. That's all for my answer for the semi products and the interest rate stress management.

Next, let's welcome the next question. This is our last question because of time limit.

[Unknown Executive]

Next question Mr. Chong Wang, to raise question.

I'm asked from the merchant debt coming at securities. And I have 2 questions. First is about the investments. I can -- We can see that net annualized investment yield increase compared with last year. I want to know that with a low interest environment. And what are the measures you've taken or your features? And how do you comment on the future investment yield? The second is about the macro demand. Just now you've mentioned the strategy of the company, and I want to ask about the life insurance demand, including the savings in the protection. In the past, [indiscernible] because of the pandemic, the decrease of the internet external environment as well as the economy. And I want to know your comment on the customers' demand. And what's your view on the catalyst for the customers' demand in the future. And in medium and short term, is unclear for the demand, especially in the past 2 years environment. And the third pillar, aged care industry in progress, but life insurance hasn't seen too much growth. And I want to know your comment on the customer demand, external environment.

Mr. Yuan to answer your first question. I think the first question has a simple answer. The net investment yield is a result of our debt investment assets and is a long-term result, it's hard to change the number is the result and the contribution from our existing business for the life insurance was a large-scale asset. It's hard to change the net investment yield. So this indicator is relatively stable and can directly show the company's major asset portfolio and allocation and a slight increase of the net investment yield is based on the formulation of the coming past just several years. And we have allocated resources to long-term investment assets with satisfied yield. And in the past 2 years, there may be fluctuations in the market. While we can see that the market in the last year is relatively good, and it has contributed larger to the yield of the company, including the dividend and interest of the company, and that's the major reason for the increase of the net investment yield.

And for the total assets of the company and the general trend, we think it's -- we might see a decreasing trend of the net investment yield, which is also in line with the clear economic circle, but it will be in a low space is because we have our large-scale existing asset. And I believe this is the general principle and is in line with the whole picture I believe the decrease of the yield from dividend and interest will be lower than the decrease of the some market assets. And as enters in the market, we will cease to grab opportunities in the capital market and to allocate the resources and assets which could yield and controllable risks. So with those factors, we believe it will contribute the total investment yield and dividend including the dividend and interest.

And in the long term, if the general economy of the picture hasn't changed the world. And I have downward trend by the way is our capability, the management efficiency and the asset allocation of the company will be lower than the downward trend of the market.

Next Mr. Yu will answer this question. I think this is a challenging question, especially in the past 2 years. There are a lot of forums and discussions. And there are a lot of questions about the transformation of the industry and how long will it last. And are there enough customer demand in the future? And the lab insurance is still in the process of development. The company has research and discuss date well in formulating our 14th 5-year plan. First question is hard to comment on the current market. We can see that life insurance industry in China is in a transformation period, and there's a common consensus.

Some has changed and some or not. And for the unchanged, the whole life insurance industry has great growth potential space, and it hasn't changed. The pandemic hasn't changed that. Pre-pandemic, We have a large potential for life insurance business. And after the pandemic, we cannot see the potential and the space for life insurance has decreased, I think the penetration rate and with the people of life insurance is not enough for people's demand for better living. And secondly, the life insurance industry have unchanged law and pattern. The industry has to meet demand for aged care health care. And the industry is -- industry with circles. And in the past years, we can see there are peaks and bottom periods. And if we benchmark the development trend of China with the international market, including the Asia Pacific market, we can see that the Asian team has experienced a high speed of growth, the decrease as well as growth of productivity and high quality. And I think this is all and pattern hasn't changed.

And there are changes. First is the customer demand has changed. We may know that in 2021, the HDP growth of China per capita has over $12,000. And the customers has been divided, but the life insurance industry is using the agent strategy, we use and differentiate agents to meet with different -- and differentiated customers and to meet their different demand. So in the past 3 years, may be critical insurance business can brought us high value but maybe I cannot meet all the demand of the customers. And the second change is the regulation environment. The regulation may be more tolerant in the past [indiscernible] team for the industry's development and in the past 3 years, the regulations becoming increasingly strict. And the third is there is a reform of the financial system and the supply of the insurance product has changed.

We have a lot of insurance users, products, including the short-term medical insurance. And for example, the government of different CDSL introduced premium products to provide protection forecasters. And now you've mentioned about the third pillar of the aged care industry. The bank has also joined the competition. So there are different demand, different supply and those are the changes and new factors and challenges that we are facing. And the second, how to comment on the future development, we believe that the life insurance industry experiencing transformation and shifting of driving factors. There's winning time to build a new driving factors the agents and customers needs to have the people relations to grow the team. And there are 3 stages to the team development, but the existing or the old driving factors hasn't changed yet.

So it's shifting us different driving models that we are experiencing, but high-quality development direction hasn't changed. And personally I believe in the future, the customers' demand is great and shifting to customer-oriented pattern, and we will used 3 pillar pattern. First is the potential and demand from the cortical units hasn't changed but we need to upgrade our different critical unit product. We have to combine the insurance with the medical service. And the second is there's a host wealth management. And like the whole life insurance and aged care insurance is business -- is our return to customer demand, which has been accumulated in the past series, which the insurance company focused on more the critical units. And certainly, you mentioned about the therapy insurance. Aged care -- of aged care -- the aged care is a Blue Sea arrear and the regulations pay a lot of attention and emphasis the group growth. And it introduced the executive pension insurance and [indiscernible] insurance companies [indiscernible] competitive strength compared with other entities.

I don't believe that we have flexible account management model and other management to may be closed for about 5 years, but we are more flexible. The second is we have a long-term process integration. And thirdly, we have prudent and stable investment yield, which can have guaranteed investment return. And for NCI, we, in the future, will emphasize aged care and health care, including the long-term saving product and the whole life insurance product. And this year, we have pilot programs in sales of exclusive commercial pension insurance. And apart from that, we also have introduced the traditional insurance products with aged care features including the pension insurance, we have mass repayment and receiving insurance product and also the whole less insurance products. And just Mr. [indiscernible] has introduced that. We need to -- we need different and diversified customers to improve productivity. So I believe the transformation of the insurance industry will need 2 more years apart from this year.

And this year, we might be in the mode and bottom, and we are shifting the products. And in the future, we will shifting the products to make agent team growth and to different market demands and appreciations. And we will shift to a diversified sales and marketing models. And if we're looking the experience of external and foreign market, we can see five years maybe as a circle and we have 3 years after the pandemic, and we may need more years.

Thank you for the introduction and answers of the questions from the analysts, media friends and our investors. And due to time limit, this is the end of the Q&A session.

[Xingfeng Gong, executive]

Our results announcements are a concern of small and medium investors and through IR e-mail and IR online, they raise their questions, and we choose 2 most concerned questions.

The first question is about the progress in innovative pension insurance products. and the product meets the demands of population aging. This question, it's about aging population. This is a short problem. The company emphasizes on the pension insurance product and product innovation we have 4 measures. The first is to long-term pension insurance products collaborative with health care and senior care. Mr. Zhang Hong elaborate this question just now. The second is to launch exclusive cans insurance products. For the young people and the customer working in. They are clear. We have exclusive products and the monthly pension insurance products. The second is to serve national strategy. We launched diversified products. New China Life is a pilot for the commercial pension insurance program through online and off-line marketing, we launch and market our pension insurance products and Mr. Zhang Hong elaborated just now, at last, we strengthened the liabilities focusing on long term and whole life pension and senior care, we launched new products.

The company will continue to launch more insurance -- pension insurance products to meet customers' diversified demand for senior care and contribute our efforts to deal with population aging. The second question is to raise the proportion of dividend distribution. The dividend distribution emphasized on the investment returns, the dividend distribution gives consideration to the long-term interest of the company, of our shareholders and the company's sustainable development.

Since 2016, the company raised the dividend distribution to over 30%. This dividend distribution is in line with the company's operation, regulatory requirements. The company has no plan to adjust our dividend distribution. At last, thank you for your support and concern for New China Life. If you have further questions, please contact our IR team because of time, the 2022 interim results announcement is over. Thank you.