Huize Holding - Q4 2025

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by, and welcome to the Huize second half and full year 2025 earnings conference call. At this time, all participants are in 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 the webcast replay will be available on Huize IR website at ir.huize.com under the Events and Webcasts section. I'd now like to hand the conference over to your speaker host today, Mr. Kenny Lo, Huize's Investor Relations Director. Please go ahead, Kenny.

Kenny Lo (Investor Relations Director)

Thank you, operator. Hello everyone, and welcome to our second half and full year 2025 earnings conference call. Our financial operational results were released earlier today and are currently now available on both our IR website and GlobeNewswire services. 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 measures today, which are more thoroughly explained in our earnings release and filings with the SEC. Joining us today are our Founder and CEO, Mr. Cunjun Ma, Co-CFO Mr. Minghan Xiao, and Co-CFO Mr. Ron Tam. Mr. Ma will start the call by providing an overview of the company's performance and operational highlights. Followed by Mr. Tam, who will go over our financial results for the year 2025. We'll open the call for questions. I will now turn the call over to Mr. Cunjun Ma.

Cunjun Ma (Founder and CEO)

[Non-English content]

Kenny Lo (Investor Relations Director)

Welcome to Huize second half and full year of 2025 earnings conference call. In 2025, China's insurance industry underwent profound structural trend changes. As bank deposit rates continued to decline, household wealth allocation shifts fundamentally, with capital accelerating to long-term stable assets such as insurance. Participating products that offer both protection and wealth accumulation emerged as a core growth engine for the industry. Furthermore, the rise of generative AI and AI agent capabilities is deeply reshaping the industry ecosystem and operating models, driving the sector towards greater efficiency and intelligence. Internationally, Southeast Asia insurance markets are expecting accelerating digital penetration, urban developments and a growing middle class, creating compelling structural opportunities. Our proactive, forward-looking strategy actively positioned us to capitalize on these dynamics and deliver a strong performance in 2025.

Cunjun Ma (Founder and CEO)

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Kenny Lo (Investor Relations Director)

Both GWP and FYP facilitated on our platform in 2025 reached record highs of CNY 7.4 billion and CNY 4.6 billion, surging 21% and 35% year-over-year respectively. Total revenue for the year came in at CNY 1.6 billion, growing approximately 27% from last year. Driven by strong top-line growth and also cost efficiency improvement from the strategic deployment of AI solutions across our organization, we delivered non-GAAP net profit of CNY 22.6 million. This marks the third consecutive year of non-GAAP profitability, a testament to our resilience, execution in a dynamic market and the long term sustainability of our business model.

Cunjun Ma (Founder and CEO)

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Kenny Lo (Investor Relations Director)

We remain deeply committed to our customer-centric strategy, serving our high-quality customer base across the full insurance lifecycle. In 2025, we added approximately 1.7 million new customers, bringing the total to over 12 million by year-end. The average age of long-term insurance policyholders was 35.3 years, with 65.8% residing in tier two cities or above, reflecting our focus on high-quality customer demographic segments. The average FYP ticket size for long-term insurance approximately CNY 7,900 in 2025, a 38% increase year-over-year. As of year-end, each of our 13th and 25th month persistency ratios for long-term insurance products remained at industry-leading levels of over 95%, highlighting our strong retention capabilities and fully validating the quality of our service and the competitiveness of our product offerings.

Cunjun Ma (Founder and CEO)

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Kenny Lo (Investor Relations Director)

By year-end, our partner ecosystem grew to 158 insured partners, allowing us to continue expanding the differentiated customized products we offer. To address the growing demand for wealth management and financial planning solutions in an aging society, we launched [Non-English content] 2.0, a participating annuity product designed to provide premium diversified retirement planning solutions. We also launched two customized million-yuan medical insurance products,[Non-English content] 2.0 and [Non-English content] 3.0, each offering differentiated features including 20-year guaranteed renewal and simplified health underwriting that cater to the diverse health protection needs of different customer segments. Together, these launches reinforce our core competitiveness in the medical insurance segment and lay a solid foundation for our long-term sustainable growth.

Cunjun Ma (Founder and CEO)

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Kenny Lo (Investor Relations Director)

We began fostering an AI-native culture across the organization during the year, deploying AI solutions across the insurance service value chain. This significantly improved our expense to revenue ratio, which fell 5.9 percentage points year-over-year to 26.3%, and was a key contributor to our return to full-year profitability. We also deployed our AI solutions across the entire customer journey, covering intent recognition, product recommendations, underwriting claims. This meaningfully enhanced the user experience and supported a 50% year-over-year increase in AI-driven self-service policy purchases among our AI systems are now capable of independently completing sales conversion. The launch of our AI financial planner highlights this evolution into a full lifecycle financial planning partner for our customers. AI can now directly generate personalized family insurance plans directly from individual users' profiles.

More recently, we launched our AI claims service with our AI agent fully embedded across core claim system. The first AI reviewed claims was settled in just 23 minutes and marks the first fully end-to-end AI agent-driven claim settlement in China's insurance intermediary sector and the completion of our intelligent closed-loop service capability. Looking ahead, we will collaborate with insurance carriers to build an intelligent, connected ecosystem spanning users, issuers and agents, embedding AI across every stage of insurance services and financial planning to fully realize our vision of an AI-driven insurance platform.

Cunjun Ma (Founder and CEO)

[Non-English content]

Kenny Lo (Investor Relations Director)

Our International business continued to deliver a strong performance. In Singapore, headquarters of Poni Insurtech, we obtained a Financial Adviser and Exempt Insurance Broker License from the Monetary Authority of Singapore, formally establishing our local operational footprint. Simultaneously, we are actively expanding our proprietary AI solutions to Singapore to offer an innovative and differentiated insurance experience. Demand for our insurance products in Hong Kong remained robust in 2025, with revenue increasing more than twofold year-over-year, driven by their differentiated product features. In Vietnam, Global Care generated a 106% year-over-year increase in full year GWP and an 84% increase in revenue growth. Notably, the GSale business line has a standout performance, with platform users quadrupling during the year and premiums growing more than threefold year-over-year, strongly validating the scalability of our digital distribution model in Southeast Asia.

Cunjun Ma (Founder and CEO)

[Non-English content]

Kenny Lo (Investor Relations Director)

Looking ahead, we will continue to focus on three strategic priorities to drive high quality growth. First, we will continue to deploy AI across our business to deepen service quality and improve user experience. By using AI to streamline workflows, we will deploy freed-up resources towards further improving service quality and expanding AI application scenarios, facilitating technology in creating real value for our customers. Second, we will deepen product innovation in our core growth areas, developing differentiated and innovative products tailored to specific customer segments. Our focus will remain on participating products in long-term health insurance to address demand for comprehensive coverage across both healthcare and wealth management. Third, we will accelerate and deepen our international expansion through Poni Insurtech, growing the proportion of overseas revenue contribution and delivering sustainable long-term value for our shareholders.

Cunjun Ma (Founder and CEO)

[Non-English content]

Kenny Lo (Investor Relations Director)

This concludes my prepared remarks for today. I will now turn the call to our CFO, Mr. Ron Tam, who will provide an overview of our key financial highlights.

Ronald Tam (Co-CFO)

Thank you, Mr. Ma and Kenny. Good evening, everyone. First of all, we closed out the year very strongly with another solid performance, despite a volatile macroeconomic and geopolitical landscape. On a full year basis, both gross written premiums and first year premiums facilitated on our platform has reached record highs of CNY 7.4 billion and CNY 4.6 billion respectively, representing year-over-year increases of 21% and 35%. While total revenue grew 27% year-over-year to CNY 1.6 billion. Notably, we gained profitability with net profit of CNY 4 million and non-GAAP net profit of CNY 23 million. Our financial growth position remains solid, with cash and cash equivalents of CNY 251 million as of the year-end.

This exceptional performance was driven by our omni-channel distribution network, expanding high-quality customer base and efficiency gains from the strategic deployment of our advanced proprietary AI solutions, underpinned by continued progress in the execution of our international expansion strategy. Looking at our core business, long-term insurance products continue to be our strategic focus, which accounts for over 90% of our total GWP in 2025. FYP from our long-term savings products surged 48% year-over-year to CNY 3.5 billion in 2025. Notably, FYP for annuity products more than doubled year-over-year to CNY 1 billion, which is driven by robust demand for wealth management and financial planning solutions in a lowering interest rate environment in China. We have capitalized on the national strategic guidance to build a multi-tiered healthcare protection system and the release of National Commercial Insurance Innovative Drug Catalogue.

With the launch of million-yuan medical insurance products to address the long-term comprehensive health protection needs of mid- to high-income families. By leveraging our well-established omni-channel distribution network and advanced AI solutions, we have significantly enhanced customer acquisition and engagement. Our total customer base has reached 12.3 million as of December 31, 2025, reflecting an increase of approximately 1.7 million customers over the full year. The repurchase ratio for our long-term insurance products remains solid at 36%, highlighting our ability to grow customer lifetime value through effective upselling and cross-selling. I would like to highlight several key operational achievements for the year that further demonstrate this progress.

The FYP from our IFA business has increased by 44% sequentially to CNY 250 million in the second half of 2025, reflecting the impact our AI solutions are having in enhancing the productivity of both our internal and independent financial advisors. FYP from short-term health and accident insurance grew 12% year-over-year to CNY 613 million, demonstrating our ability to innovate and deliver an increasingly diverse range of product offerings. As of December 31, 2025, our 13th and 25th month persistency ratios for long-term life and health insurance has remained at industry-leading levels of over 95%, underscoring the strong customer loyalty we attract with these diverse product offerings and the effectiveness of a post-sale servicing.

The average ticket size of a long-term savings product rose 37% year-over-year to CNY 103,000 in 2025, driven in part by the increased sales of premium products internationally. In 2025, we have implemented our systematic three-pillar AI strategy to enhance internal operational efficiency, to improve customer experience and to drive platform transformation. Internally, we are fostering an AI-native culture across the organization, deploying AI solutions tailored to various business units that automate routine tasks and optimize workflows. On the customer front, we have upgraded our AI app with multi-agent architecture that facilitates integrated end-to-end user journeys with product recommendations, insurance underwriting and policy servicing. Additionally, we also unlocked new revenue opportunities through AI-driven product and service innovations. For instance, our AI financial planner is capable of designing tailored family insurance solutions based on client specific information.

Collectively, these AI solutions have delivered meaningful cost savings and productivity gains. Our total operating expenses increased at a slower pace than revenue, rising by just 3.4% year-over-year to CNY 415 million. Consequently, our expense to income ratio improved significantly by 5.9 percentage points year-over-year to 26.3% for the full year of 2025. Furthermore, our AI-driven self-directed policy processes grew by 50% year-over-year in 2025, underscoring the effectiveness of our AI agents. Poni Insurtech, our international arm, delivered another strong performance and remains a key pillar of our long-term growth strategy.

In Vietnam, our majority owned subsidiary, Global Care, achieved impressive growth. With the number of insurance policies issued increasing by 31% year-over-year, driving a surge of 106% and 84% year-over-year growth in GWP and revenue, respectively. Our IFA business in Vietnam had a particularly standout year with a number of active platform users quadrupling and policies issued growing by 2.3-fold year-over-year in 2025. While GWP and revenue from this channel also grew significantly over 3.8x and 2.5x, respectively. Global Care also onboarded new merchant partners and launched Vietnam's first insurance KOL platform in July, a proven distribution model that's pioneered by Huize in China, further extending our digital reach in the local market.

In Singapore, we obtain approval from the MAS to operate as a financial advisory and exempt insurance broker, marking a significant milestone in our regional expansion. This license reinforces our dual regional hub strategy across Singapore and Hong Kong, positioning us to attract cross-border assets and deliver premier protection and wealth management solutions to consumers across Asia. Collectively, the continued expansion of Poni Insurtech will diversify our revenue streams and create new growth drivers, enhancing long-term shareholder value for Huize. In conclusion, we are confident in our ability to capitalize on the opportunities arising from China's evolving industry landscape and the broader Asian market. Domestically, prevailing low time deposit rates are expected to continue to encourage retail depositors to reallocate their wealth towards higher yield savings and participating insurance products.

In parallel, aligned with the national strategic directive to establish a multi-tiered protection system, demand for long-term commercial insurance protection for health is expected to grow steadily, underpinning healthy and sustainable development across the entire value chain. Internationally, through Poni Insurtech, we are replicating our proven model in China and proprietary AI solutions to drive our expansion into high-growth Southeast Asian markets, with a particular focus on the young and fast-growing middle-class demographic in the region. We will remain steadfastly committed to strengthening our positioning as Asia's leading insurtech platform by harnessing our advanced data analytics, fully integrated AI solutions, and a proven market penetration strategy. Our vision remains focused on building an AI-driven intelligence ecosystem that seamlessly connects consumers, our carrier partners, and distribution partners, while consistently delivering and doing value to all stakeholders.

With that, we will conclude the opening remark and open up the call to questions. Thank you very much, and over to you, operator.

Operator (participant)

Thank you so much. Dear participants, if you would like to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by. We'll compile the Q&A roster. This will take a few moments. Once again, if you would like to ask a question, please press star one one. Now we're going to take our first question, and it comes from the line of Kenny Lim from UOB Kay Hian. Your line is open. Please ask your question.

Kenny Lim Yong Hui (Equity Analyst)

Good evening, Ron. First of all, congratulations on a strong result. A couple of questions from my end. First, your OPEX was well contained, but I noticed that the operating costs grew faster than the revenue. Could you give us more color on this and how are you going to improve this? Second question will be, we know that a few regulatory changes in Hong Kong, like the broker referral fee cap and also the commission spreading, are taking effect this year. How does Huize plan to sustain your growth momentum in Hong Kong? Yeah, these two questions from my end. Thanks.

Ronald Tam (Co-CFO)

Okay, great. Thank you, Kenny, for your two questions. On the first question regarding your observation on the operating costs growing faster than revenue growth, I think in effect that would mean that there's a depressed gross margin year over year. The main reason for this has to do with the makeup of our revenue for the domestic market and also the international markets. The domestic market revenue contribution has declined because of the high growth of our International revenues. Our International revenue segment incurs a slightly lower gross margin and therefore,

That's an observation that you've made that the operating costs has, you know, the growth of that has surpassed revenue growth, and that has to do with the makeup of the revenue as I just explained. That's the first question. We do expect that the gross margins or operating margin to remain at this level. We do expect a slight improvement over the course of this year. Your second question on the Hong Kong market with regards to the regulatory cap on the referral fees and also on the commission spreading that has been in effect since the first of January this year.

We do expect and which has been seen in the market that there's been a dampening effect on the growth momentum of the overall brokerage market channel in Hong Kong, specifically coming from the MPF segment, which obviously I think most of the China-based, you know, brokers are focused on. However, we do note that the underlying growth drivers for customers to seek out offshore product in Hong Kong remains very robust, and the momentum has not decreased year-over-year. We do see that with the, you know, substantive maturity of time deposits in the onshore market, which is to the tune of, you know, for very optimistic, putting that at around CNY 3 trillion-CNY 5 trillion.

A meaningful proportion of this could be allocated to offshore markets, and Hong Kong would definitely be a natural recipient of this outflow. Therefore, the underpinning growth momentum should remain relatively robust for the Hong Kong savings plans, which is the main, you know, products that are being distributed by brokers in Hong Kong. With that, we do believe that we do expect that strong growth momentum would persist for our Hong Kong business in 2026. Back to the operator.

Operator (participant)

Kenny, any further questions?

Kenny Lim Yong Hui (Equity Analyst)

That's all from my end.

Operator (participant)

Thank you so much.

Kenny Lim Yong Hui (Equity Analyst)

Thanks a lot.

Operator (participant)

Dear participants, as a reminder, if you would like to ask a question, please press star one one on your telephone keypad. Now we're going to take our next question. Just give us a moment. Now we're going to take our next question. The question comes from Mona Wang from Greenridge Global. Your line is open. Please ask your question.

Mona Wang (Equity Analyst)

Hello, everyone. This is Mona from Greenridge Global. It's great to see the company delivering several positive developments recently. There are two questions. First question, there was some growth margin compression in the first half of 2025 as compared to the same period in 2024 when looking at brokerage income against the cost of revenue. Except for the AI, is there opportunity or another opportunity for margin expansion? Second question. You saw stronger top-line growth and a strong comeback to profitability in 2025, but the stock still trades below cash value. Why do you think the stock is not moving with the fundamentals? Thank you.

Ronald Tam (Co-CFO)

Great. Thank you for the questions, Mona, and thanks for joining us for the first time. Appreciate your attendance. With respect to your two questions, I believe the first question was about the compression of gross margin as it compressed across 2025 and 2024, and whether AI could have a you know a positive effect on improving gross margins. I think two fronts here. I think as I explained to Kenny just now in his first question, the gross margin depression in 2025 has to do with the makeup of our revenue and specifically the contribution of our international revenues to the overall revenue pool, which has increased substantially over the course of 2025.

As a result, the gross margin has decreased because the international revenue carries a lower margin as compared to our domestic or mainland China revenue segment. As a result of the two, the gross margin has been decreased. However, as you know, very accurately, with the deployment of AI solutions and the initial result that we are seeing, obviously AI deployment has a significant cost savings or productivity efficiency improvement in the business flow in the mid to back office. As you can see, the expense ratio has improved by, you know, almost 6%. That's more to do with the expense or cost savings point of view.

On a growth margin level, I think that what we can potentially envisage over the course of the next few years as AI continue to be deployed in the front line, i.e., in terms of customer acquisition, in terms of lead generation, we do believe that there could be a potential for a significant re-rating or upgrade of our gross margin going forward. For example, we have noted in our opening remarks that, you know, AI has been driving a 50% year-over-year increase in self-service policy purchases by our customers in 2025. Our AI systems are capable of independently completing sales conversions, you know, and we have been generating, you know, over millions of RMB of premiums already through the AI engines.

This obviously we do have the high hopes and high expectations that AI will continue to drive and you know scale our revenue generating capabilities to the tune that we don't need any human interaction or involvement in the entire customer acquisition and conversion process. I think that's something that we are continuing to work hard towards, and that probably is the holy grail in terms of how AI can scale our profitability over the next you know foreseeable future. That's something that we have already proven to the market, and we will continue to invest in AI driven growth in 2026.

With respect to your second question, about the fundamentals somehow is not tying with our share price performance. We do note that the market has been relatively pessimistic, I believe on the performance of our company. It may have to do with the switch of our reporting schedule, since the second half of last year, we have migrated to a half yearly announcement schedule. Therefore, the market may have certain concerns on the continued sustainable growth and, you know, performance of the company.

As we have shown in this earnings release, we have delivered strong growth, not in terms of just top line and/or premium growth, but also in terms of bottom line profitability. We have demonstrated that we are able to, you know, operate a very slim business model. With the advances in AI and our strong investment in AI-related proprietary products, you know, across our business value chain, both in the front end and we do expect that, altogether we are looking at a very robust growth momentum in 2026. So that would hopefully drive a re-rating in our share price.

As you have noted that our share price right now is trading even below our net asset value, and therefore there's significant room for us to re-rate our share price to the more of an intrinsic value. Thanks for your question once again.

Mona Wang (Equity Analyst)

Thank you.

Operator (participant)

Thank you. Dear speakers, we'll just give a moment to our participants to press star one one if they have any additional questions. Once again, if you would like to ask a question, please press star one one. That's all for the questions for today. I would now like to hand the conference over to your speaker, Mr. Kenny Lo, Huize's IR Director, for any closing remarks.

Kenny Lo (Investor Relations Director)

Thank you, Operator. In closing, on behalf of Huize management team, we would like to thank you for your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the call.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.