Kenny Lim

Kenny Lim from UOB inquired about Huize's margin performance, specifically the improvement in gross margin and its sustainability, and how the company balances channel cost growth with premium growth. He also asked about the performance and demand for health and protection products, and the main driver behind the improved blended commission rate.

Answer

Ronald Tam, Co-CFO, noted a stabilization of gross margin at around 27% in Q2, slightly up from Q1, and expects it to remain stable for the next few quarters as the industry has transitioned to the new regulatory regime. For health and protection (H&P) products, Mr. Tam reported a modest 24% sequential growth in first-year premiums from Q1 to Q2, anticipating steady growth with improving consumer confidence. He attributed the improved blended commission rate mainly to the increased contribution from customized products, which typically carry higher commission rates.

Kenny Lim from UOB Kay Hian inquired about Huize's margin performance, specifically the improvement in both expense-to-revenue ratio and gross margin, and how the company balances channel cost growth with premium growth. Lim also asked about the demand performance for health and protection products, given the strong demand for participating insurance products.

Answer

Co-CFO Ron Tam explained that gross margin stabilized at around 27% in Q2, up from 26% in Q1, and is expected to remain stable as the industry has fully transitioned to the new regulatory regime (Bao Xing Hui), stabilizing channel costs. Regarding product mix, Tam noted a modest improvement in demand for health and protection (HMP) products, with a 24% sequential growth in first-year premiums from Q1 to Q2, driven by a stabilizing macroeconomic environment and improving consumer confidence. Tam also clarified that the improved blended commission rate was mainly due to higher contributions from customized products.

Kenny Lim from UOB Kay Hian inquired about Huize Holding Limited's margin performance, specifically the significant improvement in gross margin and how the company balances channel cost growth with premium growth. He also asked about the demand performance for health and protection (HMP) products, given the strong demand for participating insurance. Lim followed up by asking for the main driver behind the improved blended commission rate year-over-year.

Answer

Co-CFO Ron Tam noted the stabilization of gross margin in Q2 at around 27%, up from Q1's 26%, expecting it to remain stable for the next few quarters as the industry has fully absorbed the impact of the Bao Xing Hui regulatory implementation. For HMP products, Tam reported a modest improvement in demand in Q2 over Q1, with a 24% sequential growth in first-year premiums, anticipating steady growth with improving macroeconomic and consumer confidence. He added that HMP products typically carry higher margins, prompting further investment. Tam attributed the improved blended commission rate primarily to the increased contribution from customized products, which generally command higher commission rates.