Huize Holding Limited (NASDAQ: HUIZ), a leading insurance technology platform in Asia, reported a year of strong financial performance and strategic expansion during its fourth-quarter and full-year earnings call for 2023. The company witnessed an 18.2% increase in total gross written premiums (GWP) facilitated on its platform, amounting to RMB 5.8 billion. This growth was attributed to its diversified product offerings, omnichannel distribution, and expansion into new markets such as Hong Kong.
Huize reported a 3.3% increase in total revenue, reaching RMB 12 billion, and achieved a non-GAAP net profit of RMB 72.3 million, surpassing their previous guidance. The company's focus on long-term insurance products contributed significantly to the results, with a 92.3% GWP contribution from this segment.
Key Takeaways
- Total GWP facilitated by Huize increased by 18.2% to RMB 5.8 billion in 2023.
- Revenue grew by 3.3% year over year to RMB 12 billion.
- Non-GAAP net profit reached RMB 72.3 million, exceeding expectations.
- Long-term insurance products made up 92.3% of GWP.
- The company expanded into the Hong Kong market, contributing 6% to total revenue in Q4.
- Huize plans to achieve double-digit revenue contribution from international markets in 2024.
- Over 212,000 new customers were added in Q4, totaling over 9.3 million customers.
- The company leverages AI to enhance business operations and customer experience.
Company Outlook
- Huize aims for a double-digit percentage revenue contribution from international markets in 2024.
- The company is focused on increasing its presence in the Hong Kong market and replicating its business model in Southeast Asia.
- Huize plans to enhance product innovation and upselling capabilities using customer insights and AI products.
Bearish Highlights
- Despite the overall growth, Huize noted lukewarm growth in the long-term health insurance category as consumer focus shifts towards savings products.
Bullish Highlights
- Huize maintained a market-leading position in long-term insurance products in China.
- The company's IFA platform saw a 73.4% increase in premiums.
- The average ticket size for long-term savings insurance products increased by 31%.
- Customized P&C insurance products contributed to a 74% increase in FYP from this business line.
Misses
- There were no specific financial misses reported in the earnings call.
Q&A Highlights
- Management discussed the demand for long-term health insurance products, particularly critical illness coverage, in China.
- The company highlighted the strength of the 2A business model and its appeal to independent agents.
- Huize addressed the potential impact of upcoming agent qualification exams and grading, expecting minimal effects due to their experienced agent base.
Huize Holding Limited's strategic initiatives and robust performance in 2023 have positioned the company for continued success in the insurance technology sector. With a strong focus on long-term insurance products, expansion into new markets, and leveraging AI for better customer experiences, Huize is poised to capitalize on the growing demand for insurance products in Asia. The company's confidence in its business model and future plans underscores its commitment to maintaining a leading position in the industry and delivering value to its stakeholders.
InvestingPro Insights
Huize Holding Limited (NASDAQ: HUIZ) has demonstrated a strong financial performance with significant growth in gross written premiums and revenue. To further understand the company's financial health and stock performance, here are some insights from InvestingPro.
InvestingPro Data:
- Market Cap (Adjusted): 38.53M USD
- P/E Ratio (Adjusted) for the last twelve months as of Q3 2023: 4.92
- Revenue Growth (Quarterly) for Q3 2023: -16.87%
InvestingPro Tips:
- Analysts predict that Huize's net income is expected to grow this year, which could indicate a positive outlook for the company's profitability.
- The stock is trading at a low earnings multiple, suggesting that it may be undervalued compared to its earnings potential.
These insights are particularly relevant as they provide a snapshot of the company's valuation and expected income growth, which are key factors for investors to consider. With the company's expansion into new markets and its focus on long-term insurance products, these financial metrics can help investors make informed decisions.
For more detailed analysis and additional InvestingPro Tips on Huize, including stock price volatility and performance over various time frames, visit https://www.investing.com/pro/HUIZ. There are 6 more InvestingPro Tips available, offering a deeper dive into the company's financial health and market expectations.
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Full transcript - Huize Holding Ltd (HUIZ) Q4 2023:
Operator: Ladies and gentlemen, thank you for standing by and welcome to the Huize Holding Limited Fourth Quarter, and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question-and-answer session. Today's conference call is being recorded and a webcast replay will be available. Please visit Huize's IR website at ir.huize.com under the Events and Webcast section. I'd now like to hand the conference over to your speaker host today, Mr. Harriet Hu, Huize's Investor Relations Director. Please go ahead, Harriet.
Harriet Hu: Thank you, Sarah. Hello everyone and welcome to our earnings conference call for the fourth quarter and full year of 2023. Our financial and operating results will read earlier today and are currently available on both our IR website and a newswire. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements. Please also note that we will discuss non-GAAP measure today, which are more partly explained in our earnings press release and filings with the SEC. Joining us today are our Founder and CEO, Mr. Cunjun Ma; COO, Mr. Li Jiang; Co-CFO, Mr. Minghan Xiao; and Co-CFO, Mr. Ronald Tam. Mr. Ma will start the call by providing an overview of the company's performance and operating highlights for the fourth quarter and full year of 2023. Mr. Jiang then provide details on the financial results for the period before we open up the call for question. I'll now turn the call over to Mr. Ma.
Cunjun Ma: [Foreign Language]. Hello everyone and thank you for joining to Huize’s fourth quarter and full year 2023 earnings conference call. In 2023, China's insurance industry continues a positive growth trajectory marking the second consecutive year of growth following the industry, significant reform in particular, the demand for savings insurance products remains robust, driving a 12.75% [ph] growth in total premiums for China's life insurance industry, at least the declining RMB interest rate. The China Insurance Consumer Competence Index also reflected a resurgence in consumer competence towards the macroeconomic environment and the insurance industry. Notably, the intention to increase insurance coverage has refunded for three concept quarter surpassing levels in the same period of both 2021 and 2022. Navigating through this evolving market trend, we have successfully saved the market opportunities in long-term saving products by leveraging our strategic focus on long-term insurance products, divers’ operational tactics, product innovation, and customer acquisition capabilities. We have once again delivered satisfactory results. In 2023, total gross recent premium or GWP facilitated on our platform reached RMB5.8 billion up 18.2% year over year. Our total revenue increased by 3.3% year over year to RMB12 billion, and we achieved a non-GAAP net profit of RMB72.3 million, exceeding our guidance of RMB60 million. [Foreign Language]. First-year premiums or FYP facilitated on our platform reached RMB2.6 billion up significantly by 42% year over year, and renewal premiums increased by 4% year over year, reaching RMB3.2 billion. In terms of product mix, the GWP contribution from long-term insurance products in 2023 was 92.3%, representing the fourth consecutive year exceeding 90%. During the year, we witnessed a rise in demand for savings product and leverage our diversified product offering and omnichannel distribution capabilities to capitalize on the market opportunities. In light of that FYP from our long-term savings product increased by 54.6% year over year to RMB1.7 billion and FYP from our long-term health product increased by 19% year over year to RMB510 million. While we maintain high-quality growth in our long-term insurance business, we also provided customer products and risk management solutions to our corporate clients, which led to a 74% surge in the FYP of our PMC insurance product, reaching RMB390 million in 2023 [Foreign language]. As of the end of the fourth quarter, our accumulated number of insurance customers exceeded 9.3 million. Among the long-term insurance customers from the fourth quarter, 65.8% were from higher-tier cities and their average age was 34.1 years old. 41.8% were a repeat purchase from existing customers, which has increased by eight percentage points year over year. We also witnessed a substantial increase in the fourth quarter in the average ticket size of saving product in terms of FYP, which was approximately RMB59,000 representing a 30% increase year over year. This was primarily driven by our focus on acquiring high-quality customers and upselling existing customers with high LTP potential, as well as the success of our Hong Kong business extension, contributing premium international product sales in the fourth quarter. As of the end of December, our accumulated persistence ratio for the long-term insurance in the 13th and 25th month remained at industry high levels of more than 95%. [Foreign language] As of the end of the fourth quarter, we have cooperated with 123 insure partners throughout the year. We maintain solid collaboration with leading insurance companies, further enrich our diversified product matrix in order to make the differentiate protection needs from customers, whether they are in search of premium brands or cost-effective products. For example, in November we partnered with Dajia Annuity Insurance to launch Dajia operations, a customized retirement and annuity insurance product, addressing the unique needs of the post-80s and 90 customers by offering elderly care services and various types of protection options. In December, we partnered with PICC Life Insurance. We launched the Darwin Critical Care Number eight Advance. This is launched in 2018, the Darwin Critical Care Series product that provided over 310,000 customers with enhanced protection through a higher limit, broader coverage and better service quality. In 2023, the GWP contribution from our customized insurance product was 61.6%. [Foreign Language] In 2023, FYP facilitated by our independent financial advisors or ISA platform, which RMB350 million, representing a significant increase of 73% from the previous year. The number of high-performing ISA studio increased by 106% in our direct-to-consumer segments. We launched a series of promotions and marketing initiatives to engage potential and high-value customers, which effectively reduced customer acquisition costs and post-conversion rate. As we extend our customer base, we continue to remain highly committed to deepening our engagement with existing customers. In 2023, we served more than 1 million families with over 11 million insurance policies and assisted with 92,000 insurance plans to a total plan settlement of RMB570 million. [Foreign Language] Recognizing the growing demand for premium insurance, and overseas at the allocation, we took actions rapidly and saved the opportunities in the Hong Kong insurance market, which has allowed us to diversify our revenue stream, both our operational resilience and enhance our risk management abilities. During the year, we partnered with China Pacific Life Insurance, Hong Kong, to co-develop the Jin Man Yi Zu multi-currency products. With the extension of our product portfolio, we have also extended our Hong Kong insurance brokerage business, creating a comprehensive suite of high-end insurance services tailored for high-value customers. With the resumption of pro-forward travel, we saw a substantial surge in the scale of our MCV business. The revenue contribution from our Hong Kong brokerage business already reached 6% of our total revenue in our fourth quarter. Beyond Hong Kong, we are actively exploring insurance business opportunities in South East Asia market. Statistics show that the average insurance penetration rate of Asia's emerging market was 3.6% in 2022. While that for life insurance was only 2.1%, in particular the insurance penetration rate in Vietnam and Indonesia was at a low level ranging from 1% to 2%. We believe that the proven success of our business model can be replicated overseas, especially as suitable for immersion market where the per cap disposable income continues to rise. We see that potential in the insurance market in this region is massive and we believe we are in a good position to capture these opportunities. [Foreign Language]. Finally, I am excited to share some of our assessments in the development of AI, large language models for insurance application. Further has accumulated served over 16 million insurance customers to date, mapping a wealth of data that encompasses not only our user profile and plan statistics but also product details and sales information. Leveraging the strengths of our dual data pools. Coupled with our industry-leading technology and innovation capabilities, we have launched a steward of tools powered by our AI marketing assistance. These tools include the annuity calculator, and extensive insurance code and knowledge -- and the intelligent chatbot, all of which are widely adopted by our consultants and agents to provide more color where annuity calculator is designed to instantly and automatically display a new payout upon calculation and clearly illustrate product features, reducing the time it takes for consultants to prepare product proposals and enabling them to quickly adjust users’ inquiries. This AI driven tool not only increase consultant efficiency, capacity, and conversion rate, but also improves the overall user experience by precisely pinpoint user needs and reducing wait time. [Foreign language] Looking ahead Huize is committed to capitalizing of the long-term growth opportunities of the insurance industry in China and Asia. We'll enhance our ability to customize, differentiate this product, and integrate online and offline product distribution and services in our home markets. We'll continue to invest in our market expansion in Hong Kong and actively pursue opportunities in the emerging markets of Southeast Asia. Our goal is to identify addressable growth markets with supportive demographics and replicate our proven business model further, diversify our revenue stream to more markets and elevate our brand awareness and recognition on the international stage. We're targeting a double-digit percentage revenue contribution from international markets in 2024. At the same time, we have been investing in our own proprietary AI large language model, and will strive to integrate our AI products throughout the entire insurance service chain to empower our business operations and ecosystem partners, which include insurance carriers, independent agents and distribution channels, from the initial insurance product consultation to user engagement, marketing risk management, customer service, and plan service. [Foreign language] This concludes my prepared remarks for today. I will now turn the call over to our CFO Mr. Ron Tam and he will provide an overview of our key financial highlights for the fourth quarter.
Ron Tam: Thank you, Mr. Ma and Harriet. Good evening everyone in the Asia time zone and good morning to everyone in New York. As the macro economy and industry conditions gradually recover, we are very pleased to report that the total GWP facilitated on our platform for the year increased by 18.2% to RMB5.8 billion in 2023. We think that this growth is largely driven by our omnichannel distribution platform capabilities, a high-quality customer base, a diverse range of product offerings, as well as our maiden contribution of international revenues from our expansion into the Hong Kong market in the second half of 2023. Our efforts to acquire new customers have also become increasingly efficient. With more than 212,000 new customers added to our ecosystem in the fourth quarter. By the end of the year, our total customer count has exceeded 9.3 million. We are proud to announce that we recorded a non-GAAP net profit of RMB72.3 million for the 2023 fiscal year surpassing our previously given guidance of RMB16 million. Our fourth quarter non-GAAP net profit of RMB16.4 million also marked our fifth consecutive quarter of profitability. Our first financial results are a testament to the effective execution of our key business strategies. To elaborate, first, we have consistently prioritized our strategic focus on long-term insurance products, which have contributed to over 90% of our gross recent premiums for the 17th straight quarter. Secondly, we have continued to empower the capabilities of insurance agents through our superb distribution network product innovation and technological advancements. This has resulted in a significant 73.4% year-over-year increase in premiums generated by our IFA platform reaching RMB354 million in 2023. Thirdly, we continue to pursue upselling opportunities across the high-quality customer base. In 2023, the repeat purchase ratio for our long-term insurance products client by 6.9 percentage points year-over-year to 36.9%, reflecting the deepening loyalty and trust of our customers in our brand. And finally, we continue to optimize our operational efficiency and customize acquisition costs as reflected in the further improvement in our gross margin and expansion expense ratio. As we look at our operational results, I want to highlight several key achievements that drove us strong performance. One, our first-year premiums that renew premiums increased by 42% and 4% year-over-year respectively, indicating our ability to attract new customers and also engage with existing ones. Second, our persistency ratio for long-term life and health insurance remains at the industry-high level. As of the end of the year, the 13th and 25th-month persistency ratio stood about 95%. And third, the average ticket size for long-term savings insurance products, which has become increasingly important as a category for our distribution increased by 31% year-over-year to over RMB54,000 in 2023, demonstrating a continued success in upselling our existing customers. These highlights are just a few examples of a high-quality customer profile and our relentless efforts and successes in capitalizing on the lifetime value potential of our customers. In 2023, we proudly sustained a market-leading position in long-term insurance products in China. The FYP of a long-term health product increase by 19% year-over-year to approximately RMB500 million, while the FYP of a long-term life and annuity product search 55% year-over-year to RMB1.7 billion. We'll continue to pursue a balanced product mix between long-term health and savings categories to satisfy evolving customer needs and market environment. In parallel, we have actively diversified our product portfolio to include also customized P&C insurance products. This diversification has also paid off as the FYP from this business group by 74% to approximately RMB400 million in 2023, providing us with new and promising revenue stream diversification. In addition, our expansion into the Hong Kong market yielded encouraging results with total international revenue contribution from Hong Kong reaching 6% in the fourth quarter. Throughout the year, we have diligently maintained tight control over our marketing expenses and continue to streamline our operations to improve our profit margins and efficiency. Our growth margin improved to 37.4% in 2023 from 36.6% in 2022. This improvement reflects the enhanced customer acquisition efficiencies and the increased repeat purchases by existing customers. In 2023, our total operating expenses continued to decrease falling by 15% year over year. Our operating expense ratio further improved to 33% in 2023 from 40% a year earlier decreasing by seven percentage points. We also achieved non-GAAP net margin of 6% for the full year of 2023, and as of the end of 2023, our financial position remained strong as a combined balance of cash and cash equivalent stood at RMB249 million, which is more than $30 million. In addition, our commitment to drive shareholder value, we have continued to buy back shares from the open market under our existing mandate. And as of the end of 2023, we purchased, and aggregate of approximately 1.5 million ADSs, which we iterate management's confidence in our long-term business model prospects. As we continue to solidify our market share in China, we are committed to capitalizing on the long-term digitalization opportunities of Asia's insurance industry. Our key focus will be to increase our presence in the Hong Kong market, where we plan to expand the sales team and launch more customized products to capitalize on the robust MCB demand and also local insurance demand for high-value customers. We also proactively identify addressable growth markets with supportive demographics in Southeast Asia and largely untapped market potential to replicate our proven business model in China, and further diversify our revenue stream to more markets and elevate our brand awareness and recognition on the international markets. We have set the target to achieve a double-digit revenue contribution from international markets by 2024, and this goal reflects our confidence in the scalability and replicability of our business model itself. Moving forward, we'll continue to leverage our deep customer insights and our own proprietary AI products to enhance our product innovation and upselling capabilities. We'll also further strengthen the integration of our online to offline ecosystem to enhance customer acquisition and engagement capabilities of our insurance agents, by providing them with the tools and support in an increasingly competitive landscape. As we recognize the importance of resource allocation across the businesses, we'll maintain a laser-sharp focus on driving further improvement in operating efficiency with the aim to enhance the overall profitability. And in summary, considering a robust AI powered product innovation capabilities are extensive online to offline distribution ecosystem, the empowerment of our insurance agents and IFA partners and are proactive overseas expansion efforts, we are continued to be optimistic about the outlook for 2024. We are now targeting a non-GAAP net profit of RMB 16 million for 2024 with continued investments in new markets and AI. We are confident that our strategies will solidify our position as a leading insurance technology platform in Asia, connecting consumers, insurance carriers and distribution partners digitally and efficiently through our data-driven and AI powered solutions. And with that, we'll now open up the call to questions. Thank you very much and open to your operator.
Operator: [Operator Instructions]. We will now take our first question, and this is from the line of Amy Chen from Citi. Please go ahead.
Amy Chen: Hi, first of all I want to congratulate management on another profitable quarter. And then I have two questions. The first question is on the rationalization of compensation paid to the brokerage channel, which is called [indiscernible] in Chinese. And I'm wondering, how would this impact our brokerage income, in terms of, for example, for annuity products or say for CI products, how would this impact our first-year commissions and the renewal commission? And the second question would be on customer demand, going to 2024, how has the product mix shift, so far and what is our most mainstream or most popular product at the moment? Thank you.
Unidentified Company Representative: Thank you, Amy. So, I got two questions from you. The first one on policy employee impact on the business. So, we, we know that this is a very important topic among investors' minds right now. And, so far, I think what we've seen, which has happened already for the bank assurance channels, is that commission rates have generally been reduced by around 30%, to 50% in that area, for the brokerage and agency channels, of course, the actual regulations have not come out officially or in effective yet. But we do expect that this will come probably in the next few months, maybe as early as April. So, what we envisage is that probably there'll be a somewhat similar kind of impact on the brokerage and agency channels as we have seen in bank assurance channels, in terms of commission rate impact generally speaking. And I think the impact on the offline, so-called savings products will be more marked, or more, adversely impacted, and versus some of the online-only products. So, that's what we see, as the potential market impact on that question. On your second question about customer demand, and product mix shifts, I think that we have also continued to see strong and sustained momentum in the long-term savings category or annuities. This has still been the most popular or most in demand product among Chinese consumers, due to the declining rates environments and probably the lack of attractive alternative investment alternatives in the China market right now with what we've seen in the real estate market and also underperforming equities market. So, the long-term savings products offered by insurance companies still represent a very viable and attractive investment product or wealth allocation product for general Chinese consumer. So, we see that for the rest of this year and least for the first quarter, we are still seeing very strong demand for savings products. And in in particular, we have been distributing, participating long-term savings products. And we are probably, one of the leading online platforms to distribute hopefully the most popular participating product right now offered by the market, which is from generality China. So, we are probably the one of the leading platforms distributing this product in the China market. So, I think this is probably -- this is going to be the mainstream product for the rest of the year, and we will continue to work hard to co-develop customized products in this category with some of the larger brand names which we hopefully will be able to launch as early as April next month. We will be looking to cooperate with one of the top brands in the China market for a customized free exclusive long-term participating savings product. So those would be the answers to your questions, Amy.
Operator: We will now take our next question, and this is from the line of Coco Gong from Morgan Stanley. Please go ahead.
Coco Gong: Congratulations on the very good results. I only have one question that's a little bit specific. Ron, talk a lot about the savings products de mine, and obviously the protection is still on investors' mind, although the de mine seems to be still kind of weak right now, especially in China. So, I want to understand, since we can see a lot of data on this. Do we see marginal improvement on critical illness, like the long-term health insurance product? Specifically, are we seeing more customers, new customers buying this insurance product, or are we just seeing more existing customers buying more coverage and do we see any other potential signs of marginal improvement in a specific product type? Thank you.
Ron Tam: Thank you, Coco. Question on customers or consumers' demand on long-term health products, particularly in the critical illness type of products. I think, we do see continued, or at least from our internal data, I mean, obviously the savings category is what people want these days. And especially in the current macro environment. I think generally, Chinese consumers have a relatively stringent budget to allocate the money. So long-term savings or long a whole life products or particularly participating products these days have drawn a lot of the customer's focus and budget. And so, I think that this is why we still continue to see a readily lukewarm growth in the long-term health categories, for example, critical illness, which has continued to be recovering slowly. We do see customers, existing customers and new customers buying these products through our platform. It's not like the demand is not there, it is just that with the relative attention more towards savings products generally in the market. And especially, it is a function of intermediaries like ourselves, platforms like ourselves and our competitors, and also generally insurance agents in the overall market, mainly pushing the distribution and sales of savings products, which is resulted in such a market phenomenon. So, what we do is we will continue to innovate on the health products. So, we mentioned that we have just launched Power number eight, which is a new version of our long-term successful brand IP in the critical illness category. And this time we actually now working with PICC, which Mr. Ma mentioned earlier in the call. We are working now with large insurers on these customized products. So hopefully, create more attention among our customer set and to drive more sales in these categories.
Operator: We'll now take our next question. This is from the line of Zeyu Yao from CICC. Please go ahead.
Zeyu Yao: Thanks, management. And congrats on your good result, this is Zeyu Yao from CICC, and I have one question here, and my question is for the 2A segment. Could you give us some more color on how is it going so far? And we've noticed that the recently insurance Association of China has asked for industry's advice about agent classification. So, if it's in claimant's eyes, I think it may have some effect on to a business. So, could share some more views on that. Thank you.
Cunjun Ma: Thanks. So, we touched on the 2A business earlier in the opening remarks. I think, this business line has continued to be very strong at least in 2023. It's contributing almost 20% of our overall premium facilitated, and we continue to see strong growth in this business line. So, specifically, I think there's a number that I can share here. So, FYP facilitated by the IFA platform, which is the 2A platform was RMB350 million last year, which is a year-over-year increase of 73%. And I think the most important thing is more and more independent agents or IFAs are now coming to our platform as partners because they find the three things that are very much our competitive strengths. Firstly, we have a very extensive product matrix from simple PNC products to the extensive, life and health products that we have. And in particular the customized, exclusive creature products that we could develop with insurance carriers. So, I think that's a big draw to these inter -- independent agents to become associated with us as a partner. And secondly, I think, obviously, because of our scale advantage, we earn top commission rates with most of the insurance carriers. And thereby, these agents by plugging into our platform will be able to enjoy the revenue pickup versus maybe partnering with another platform or as an agent, inside an agency. So, I guess these are the things that are helping us attract more and more agents to come. And I think finally most importantly, we have a whole suite of the digital tools that we have been mentioning across our opening remarks, which really helps digitalizing the customer journey for these agents and also help them manage customers very efficiently with our digital and AI tools. And there's something that I think is quite a unique proposition in the Chinese market at least. So just to touch upon the IFA business model, I think what we are looking to launch is, we want to replicate this into the rest of Asia. So, I think we'll be starting with Hong Kong and also going to other parts of Southeast Asia. I think that's something that we think will be a very good value proposition to those local markets as well. So, I think, in short, it's performing very well, and it will continue to be, it will be increasingly important as a revenue stream and business life for us. And your second part of the question is regarding the, well, I believe is the fin fund, right? The [indiscernible], so the agent qualification exams and the differentiation of different gradings. So, what we understand is right now there is four grades for agents, grade one to grade four. So, for grade one, you can sell all the complicated products, life and health savings, whatnot. And grade four, you can only sell very simple products like protection or PNC. What we think that is, for most of the agent partners that we have on our 2A business or our IFA platform, most of these are relatively experienced agents that has been in the, who have been working in the industry for over five years on average. So, this regulatory impact will be minimal because I think most of these experienced agents have already qualified or can qualify for the higher tiers of the classification, and therefore it will not have a limiting impact on what they can sell or distribute to the customers. And I think that the same can be applied to our in-house consultants and agents in the Huize platform. And most of our high-performing agents, can qualify under these new regulations. And we think that the draft paper has been out, but then the effective date would likely to be next year.
Operator: Thank you. At this point, we have no further questions, so I would like to hand the conference back to Harriet for closing remarks.
Harriet Hu: Thank you, operator. So, on behalf of Huize Management team, we would like to thank you for your participation in today's call. And if you require further information, please feel free to reach out to Huize’s IR team. And thank you again for joining us today. This concludes the call.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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