Earnings Call: H2 2019

Mar 30, 2020

Ladies and gentlemen, good morning. Welcome to the 2019 results announcement of PICC Group and PICC P&C. During the ongoing epidemic, the government has been calling for efforts to limit crowds, so this results announcement is held via teleconferencing and live streaming. Thank you for your understanding. My name is Li Zhuyong, Vice President of PICC Group, and I am the moderator of today's meeting. Now I would like to introduce the members of the management team present in this meeting. Chairman of PICC and PICC P&C, Mr. Miao Jianmin. Executive Director and Vice President of PICC, Vice-Chairman and President of PICC P&C, Mr. Xie Yiqun. Vice-Chairman and President of PICC Health, Mr. Hua Sheng. Vice-Chairman and President of PICC Life, Mr. Fu Anping. Vice President of PICC P&C, Mr. Shen Dong. Vice President of PICC P&C, Mr. Shao Liduo. We are also joined from Shanghai by Vice-Chairman and President of PICCMIC, Mr. Chen Beichuan, and Vice President of PICCMIC, Mr. Huang Benyao. There are two items in today's agenda. First, we will invite Chairman Miao Jianmin and Vice President Xie Yiqun to brief you on the 2019 business results of PICC Group and PICC P&C. This will be followed by a questions and answers session. The PowerPoint slides can be downloaded from the website of our company, and all the data are based on Chinese accounting standards. To see their difference with data from IFRS, please refer to the appendices of the PowerPoint slides. Now, I would like to turn it over to Chairman Miao Jianmin. Good morning. Welcome to the 2019 PICC Group and PICC P&C's annual results presentation, held via teleconferencing and live streaming. There are two parts in today's presentation. In the first part, I will be giving you an overview. In the year 2019, it was a very important year for us to transform towards high quality development. Over the past year, we have been committed to pursuing progress while ensuring stability, and we have implemented new development vision, and we have also been advancing the 3411 project of the group. Our revenue and profitability continued to rise, and we have generated impressive results in transforming towards high quality development. In the year 2019, our performance highlights are as follows. Our total insurance premium income stood at CNY 555.3 billion, up 11.4%, and the net profits attributable shares of the parent company stood at CNY 22.4 billion, up 66.6%. Earnings per share stood at CNY 0.51, up 60.3% year-on-year. ROE stood at 13.4%, up 4.6 percentage points year-on-year. The net assets attributable to shareholders of the parent company stood at CNY 183.1 billion, up 20.1% from the beginning of the year. The total ROI stood at 5.4%, up 0.5 percentage points year-on-year. In order to ensure that investors can share our business results, the board has suggested a cash dividend payout of RMB 0.116, up 154%. In the future, by meeting our own capital needs for continued development, we will make more efforts to pay dividends. In the year 2019, the company continued to advance our 3411 project, which is aimed at transforming towards high quality development, and we have generated impressive results. First, the three insurance subsidiaries have continued to generate results in transformation. PICC P&C has been integrating its policy-based business and commercial business. It has also been integrating its technology transformation and the change of its commercial model. It has increased the quality and efficiency of its claim handling. It has been building this business model of insurance plus tech plus services. in 2019, the insurance premium from agricultural insurance networks stood at CNY 46.8 billion, up 20.4% year-on-year. Car insurance stood at RMB 34.3 billion, up 14.3% year-on-year. The sales of auto insurance from direct sales and directly controlled channels was up 69.3%. We have been taking measures to reduce risks and the damages and the VAT deductions. The tech-enabled auto claim handling and platforms helped to reduce our loss by CNY 8.15 billion, up 87.3%. We continue to create new value and continue to become a high quality service provider. We have remained at an AA services rating, the highest in the standard. We have been working to transform growth drivers and change our business model, as well as strengthening our basic activities and to create more value. In 2019, the first year premium was premium paying period over 10 years has increased by 51.2% year-on-year. The monthly effective agent ratio has increased by 48%, and monthly agent premium has increased by 10.4%. The new business value has went up by 7.9%. Embedded value increased by 26.1%, and net profit has grew by 3.6%. PICC Health continued to pursue the policy of becoming more professionally efficient, lean, and flat. It has been striving for flat management and professionalism. The year-on-year growth of first year regular premium was premium paying period, or has been up 227.4%. The embedded value has went up by 31.6% year-on-year. New business value has went up by 18.9%. We continue to generate more capabilities in creating value. Number 2, we have been advancing the 3411 project. In terms of innovation-driven strategy, by the end of last year, the Work in Sync with Police service has been rolled out in more than 230 cities, serving more than 3.3 million people. Technology-enabled claim handling projects has increased our efficiency and risk resistance capabilities. The online claim handling rate of auto insurance has went up, has reached 66.7%, up 58.3 percentage points from the beginning of the year. While using new technologies, we have reduced our claim payment worth of CNY 1.56 billion. The life annuity products based on online scenarios for PICC Life Insurance has reached CNY 7.1 billion, and we have accumulated 11 million effective clients. PICC Health has been transforming towards an online business model, and the online sales of health insurance stood at CNY 7.2 billion. In terms of our digitalization strategy, we have been using the strategy of improving digital platforms and integrated customer experience on projects. The seven projects have been made to go live, and we have made the PICC cloud go live. We are the first company in the industry to have a fully distributed core system and its own cloud. We have won the top 10 business case for the use of clouds, as rated by the China Academy of ICT. We have also won the top prize for information application in the insurance sector in 2019. The online sales of household car insurance has reached 59.5%, up 43.6 percentage points. This improves customer experience. PICC Health and PICC Life, their mobile issuance of policy reached 85% and 97.5% respectively. The PICC app has been launched officially in 2019, with registered users of 6.5 million, and the monthly active users reached 1.2 million. We have already launched nearly 120 products. In terms of integration strategy, we have been integrating our insurance segment and investment segment so as to drive the corporate and occupational annuities sales via our insurance resources and increase our insurance sales by the development of investment projects. We have been promoting the efficient settlement of agent commissions. We have continued to improve the PICC app so as to generate a total insurance premium of CNY 31.1 billion. In 2019, we have generated an increase of auto insurance by 25.4 percentage points year-on-year. The first year regular premium for the life insurance has went up by 58.9%. In terms of our internationalization strategy, we have been able to serve nearly 200 countries, and we have been the only insurer or the main insurer for many important overseas projects, providing full insurance protection for overseas clients. Number 3, when it comes to the tough battles in core cities and defensive battles in the counties and areas, our market share in core cities has went up by 0.8 percentage points. Our premium increase is 35.8% in core cities. First year premium from core cities stood at CNY 6.11 billion. Number 2, we have been ensuring the bottom line of no systemic risk. We have been strengthening our regulations, and we have been taking in-depth measures to rectify problems in important areas. We have been taking efforts to forestall credit risks and liquidity risk. Our net operating capital cash flow reached CNY 36.8 billion, and we have strengthened the management of assets and liabilities so as to ensure sustainable development of the company. We have continued to advance the 3411 project. Our profitability continue to increase and our profit structure continue to improve. Our consolidated net profit stood at CNY 31.7 billion, a record high and up 62.5%. In terms of structure, the PICC P&C segment continue to see a steady rise in profit, and other segments has seen fast increase in its profits. The profits from other businesses account for 21.3%, up 4.9 percentage points year-on-year. We have strong solvency capabilities, and we meet the regulatory standards, and we are highly resilient. Over the past year, PICC has been fulfilling its social responsibilities and its responsibility as a central SOE. When it comes to serving the rural areas and combating poverty, the four counties that we helped with poverty alleviation, all of them have been lifted out of poverty, and we have been promoting high quality development of agricultural insurance. We have served 88.7 million rural households with policies worth CNY 2.3 trillion, and we have become the only state-owned financial enterprise that has been listed in the corporate poverty alleviation blue paper of the State Council. When it comes to driving high-quality development, we have been working to facilitate the major national policies and, in particular, in the field of new materials insurance. We have been underwritten 1,081 major equipment insurance projects at the national level. Okay. We have also been supporting the growing and manufacturing strong power, the Belt and Road Initiative, with coverage of over 200 countries and regions, with a highly supportive overseas network. We are also providing support and coverage for the private SMEs and micro businesses, with altogether 250,000 businesses as such being covered, amounting to CNY 76 trillion. We are committed to the true purpose of insurance. With that in mind, innovating businesses and services provided, we have provided a growing insurance, growing investment, and also made new efforts into growing social governance-based new business to provide coverage for safe production and elevator insurance. The Work in Sync with Police is a project with a coverage of 330 cities, with altogether 3.3 million beneficiaries of this coverage. In 2019, we have altogether paid out CNY 278.4 billion in claim payment, ranking at the top. It is a reflection of the central SOE's responsibility. We are incorporating ourself into a medical insurance system to contribute to a Healthy China. We have covered 1,646 medical insurance program, covering 31 cities, and benefiting 830 million people, with our health insurance clients reaching 28 million. We have hospitals working collaboratively with us, amounting to 8,000, and that will help us to ensure better accessibility and availability of healthcare. Of course, coronavirus outbreak has been a source of disruption for all businesses. We are not immune to this impact. But under the strong leadership of the Central CPC and all the efforts across China, we have seen the epidemic coming under control, and the fundamentals of upward trend of Chinese economy remain unchanged, and the insurance would continue with its upward momentum. We see this outbreak as a major test for the company. It is also an opportunity for high-quality growth and a transformation. We will stay committed to the reform of the supply side and to build on the momentum of the 3411 project and explore model transformation of not only our business, but also explore possibilities of this triad model of insurance, tech, and service. We will look for ways to disintermediate, cut cost, and improve experience so that we can build customer loyalty with property and casualty. That requires not only integration of policy and commercial-based business, and a combination of the technology and business model. We would innovate with auto business and look for new possibilities and models for non-auto business. That requires a stronger team on the direct sales and direct channels at a cut cost and improve our service for claims management while we stay compliant to all the risk parameters. That will put us ahead of the industry. PICC Life will focus on the three transformations with team building, with improvement on the sales model, improvement of product mix with better match of the maturity and source of interest. For PICC Health, we will build a more professional, efficient, lean, and flat operation model that help us to combine health insurance with health management and information technology. On the investment side, we will operate with a low interest rate environment that will help us to better optimize the allocation. Now I'd like to hand it over to my colleague, Mr. Xie Yichun. Thank you, Chairman Miao Jianmin. I will now move on to the specific segments. On the P&C side, in 2019, PICC P&C has been thoroughly implementing new development visions with all its efforts on 3411 projects and the 10 priorities. We have made the transformation towards high quality growth, and that delivered not only expansion, but also profitability improvement. The highlights are as follows. The GWP amounted to CNY 433.2 billion, up by 11.4%. Market share stood at 33.2%, up by 0.2 percentage points, and the combined ratio stood at 98.9%, generating an underwriting profit of CNY 4.05 billion. The total investment return stood at 4.9%, up by 0.2 percentage points. The net profit stood at CNY 24.9 billion, up by 53%. ROE stood at 16.1%, up by 4.1 percentage points. The operating net cash flow amounted to CNY 25.8 billion, up by CNY 15.6 billion. We proposed a cash dividend of CNY 0.461 per share, up by 69.5% year-on-year. More specifically, we have seen for the first time, GWP of PICC P&C exceeding CNY 400 billion, more specifically at CNY 433.2 billion, up by 11.4%. It is above the industrial average. The incremental premium stood at CNY 43.7 billion, taking up a market share of 34.7%, ranking at the top of the industry, and market share grew by 0.2 percentage points. Overall, we have been restructuring our product mix with greater efforts on non-auto business, and that has generated an increase of non-auto business in our portfolio by 5.9 percentage points. For auto, we have earned total premium of CNY 262.9 billion, up by 1.6%. Looking at the breakdown, we have altogether covered household vehicles of 59.07 million, up by 7.3%, with a market share of 79.4%. We continue to improve our business mix with direct sales accounting for 69.3%, up by 5.1 percentage points. We also have seen 81.9% of our auto clients as those without claims, up by 1.3 percentage points. For those with both compulsory and commercial auto insurance, the rate reached 81%, up by 0.4 percentage points. On non-auto side, PICC P&C continue to consolidate our strength in policy-driven business, and that help us to drive integration of the policy-driven and business-driven models. We are rejuvenating the village, helping with the alleviation efforts and Healthy China initiatives, while at the same time moving forward with our business model transformation. Non-auto business grew rapidly last year with the total GWP standing at CNY 170.2 billion, up by 31.1%. Among which, A&H, agricultural insurance, liability insurance alongside credit surety insurance are some of the fast-growing ones. For the accidental injury and the health business, we had a quite robust year. We took the opportunity of the critical illness insurance reform rolled out at the national level while aligning ourselves with the poverty alleviation efforts and Healthy China strategy of China. We are actively part of the pilot programs of long-term care and looking for ways to combine insurance and service with a better segmented client base. We have also seen the better synergy generated of this medical insurance, accidental insurance, and the commercial health insurance, leading to a total gross premium of CNY 57.6 billion, up by 42.5%. On agri insurance, we continue to improve the standards of the product and expansion of the coverage with GWP at CNY 30.8 billion, up by 15.2%, contributing market share of 45.3%. We continue to lead on the agri side. On liability side, we have been committed to providing service to the real economy, to national strategies, to contribute to social governance and the new economy. That help us to grow to the new level, building on top of the existing large premium base. We had a total revenue of CNY 27.2 billion, up by 25.4%, with a market share of 36.1%. Again, we are top of the market. We are exploring the combination of insurance, technology, risk control, and service. With technology empowerment, we seek to further drive business model transformation and new business creation that help us to consolidate our strength. On credit surety insurance, we have scaled up our investment into this area with new business models, and that contribute to CNY 22.8 billion in GWP, up by 96.7%. Last year, the loss ratio stood at 65.9%, up by 3.9 percentage points. Particularly with three rounds of the pricing reforms on the auto side, and also along with the rising maintenance cost, injury compensation and claim payout, and the increasing medical bills, we have seen the loss ratio on auto side increase by 2.6 percentage points. On non-auto side, agri grew by 4.6 percentage points, driven by storms, droughts, as well as African swine fever. On credit insurance, the loss ratio grew by 17.9 percentage points, mainly driven by the upward trend in credit risks. Considering the downward pressure on the macroeconomy and the rising uncertainty, the company is consciously matching our risk portfolios against this macro environment and made the appropriate provisions of reserve. On the P&C expense ratio, the comprehensive ratio stood at 33%, up by 3.5%, and that's mainly coming from underwriting expense ratio cuts, while our administrative expense ratio remains steady. We continue to restructure our business mix. While ensuring our faithful reporting of commission, we have optimized our sales commission arrangement, and that contributed to a 4.4 percentage points cut on the expense of auto. That have contributed to our underwriting profitability for auto business. The combined ratio stood at 96.7%, up by 1.7 percentage points. For the non-auto side, we have seen a combined ratio increase of 0.4%. While maintaining a steady pace of growth at the P&C side, we have been working on tighter credit lines and process control with the cost recovery being incorporated into our KPI system, and that helped to drive up the revenue income. But we have also seen a reduction in the before deduction commission cost, and that help to contribute to our operating cash flow. Altogether, we had CNY 25.8 billion of operating cash inflow, up by 153.2%. In the last year, we also hit a record high on the net profits, reaching CNY 24.9 billion. The returns per share stood at CNY 1.12. ROE also increased by 4.1 percentage points, standing at 16.1%. That put us at the top-performing ones among international P&C insurers. That's why we propose a cash dividend payout of CNY 0.461 per share, up by 69.5%. The year-end total assets stood at CNY 600 billion, up by 8.2% compared with beginning of the year. The net assets stood at CNY 170 billion, up by 20.7%. In terms of life insurance in the year 2019, PICC Life has been changing its business model and working to improve basic activities and creating more value. These are its transformation efforts. We have been implementing the STONE project so as to strengthen our training and professionalism. We have launched the program for six types of teams so as to increase the qualities of the members of the teams. We have also used values to provide guidance as well as the adoption of basic regulations. We also adopted the classification of agents and improved training. We used detailed strategies to empower the sales agents and sales activities. Due to the achievements generated by the development of our human resources, our life insurance has been seeing good growth. In year 2019, our first year regular premium reached CNY 19.8 billion, up 17% year-on-year. First year regular premium from premium policies that was premium payment period at or above 10 years, has reached CNY 6.9 billion, up 51.2%. Our new business value continued to witness high increase. In the year 2019, based on prudent principles and actuarial analysis, we made adjustments to the morbidity ratio. After the adjustment, the value of the new businesses reached CNY 6.2 billion, up 7.9% year-on-year. The pre-adjustment new business value stood at CNY 6.7 billion, up 17.2% year-on-year. By the year of 2019, embedded value stood at CNY 89.1 billion, up 26.1% from the beginning of the year. The in-force business value stood at CNY 33.8 billion, up 28% from the beginning of the year. In the year 2019, the embedded value increase for us has come from new businesses. We continued to see further the narrowing of experience on negative deviations. The changes to the model and assumptions adjustments are due to the changes of morbidity rate. We have working to improve our human resources team, the sales team, and by the end of 2019, we have nearly 400,000 sales agents. The effective agent ratio per month increased by 48% year-on-year, and monthly activity ratio, which went up by 4.5 percentage points in the year. When it comes to PICC Health, we have been committed to becoming more professionally efficient and flat. We have generated new results in transforming our business model. Commercial health insurance has saw fast development. Regular total underwritten premium reached CNY 13.8 billion, up 101.8% year-on-year. The online sales of insurance for health insurance reached CNY 7.2 billion, up 303.9% year-on-year. We accumulated 28 million clients, and the first year regular payment of was premium paying period of 10 years has went up by 195.7% year-on-year. When it comes to government commission businesses, our premium income reached CNY 9.4 billion in 2019, up 10.7% year-on-year. In terms of health management business, we have been improving the functions of People's Health app, and we have set up a system integrating both online and offline services. By the end of 2019, we have already established cooperation relations with 8,000 medical institutions, 600,000 doctors, and 182,000 pharmacies. When it comes to the asset management segment, the company has been building its professional capabilities and strengthening the development of its investment research capabilities, and we have been committed to increasing absolute value, and we've pursued the principle of matching asset with liability. By the end of 2019, our total AUM reached about CNY 1.7 trillion, up 9.2% from the beginning of the year. In 2019, the stock market has saw significant rise, but there has been huge fluctuations. The interest rate for the debt market has also witnessed volatility, and we have been prudent in allocating assets. Compared with the beginning of the year, the ratio or the share of fixed income assets dropped by 2.9 percentage points, and there has been an increase with the share of stocks and funds. In 2019, our total ROI reached 5.4%, which is a high level, and the long-term fluctuation is lower than the average of the industry. In 2019, we have been managing properly the allocation of fixed income assets and our programs in this regard, and we have managed the risks. When it comes to the investment in high credit risk alternative investment products, the companies that we invest in are robust and we invest mostly in debt investment schemes, and these schemes focuses on transportation, energy, and properties. When it comes to their ratings, 99% of them have been rated AAA and others are rated as AA plus. When it comes to credit enhancement, corporate guarantee accounted for 48%, bank guarantee accounted for 19%, and guarantee exemption accounted for 34%. When it comes to emerging segments, PICC's financial services is a new emerging area, and we have been Innovating new systems and taking new measures. We have been implementing the strategy of insurance plus tech plus services, and this has helped to empower our core products so as to drive down cost and improve our services. In 2019, our transaction value reached CNY 35.6 billion, up 69.8% year-on-year. We have accumulated 10.59 million users, up 36.7% year-on-year. When it comes to the building of ecosystems for the services of vehicles, the platform has introduced a direct supply model of auto parts, and this service has covered 36 provinces and 362 prefecture-level subsidiaries. We helped to reduce the payment of claims by CNY 790 million. This service has become the benchmark for the sector. When it comes to the development of insurance technologies, we have been based on the model of insurance plus tech plus services, we have saw new progress in the use of technology in traffic and in scenario-based insurance sales. The eBaoTech has won a national recognition, the platform has extended the services to car wash, maintenance, and fast repair. It has been linked to PICC app, as well as more than 3,000 SMEs in the field of car services. This makes the services of our auto insurance more accessible and making our certain clients more sticky. We have reached a total user number of 13.3 million, with monthly active users reaching 460,000. We have been the only project to win the 2019 Capital Financial Innovation Award in the insurance sector. When it comes to innovation incubation, we launched the first insurance maker space in the insurance sector in China. This platform is a coordinated innovation platform, attracting both external projects and building insurance tech ecosystems. When it comes to the pension sector, PICC Life is a professional platform for trusteeship-based pension asset management. Our AUM continue to increase, it has laid a solid foundation for the high-quality development of the group. By the end of the year, PICC Life's AUM has reached CNY 120.4 billion, up CNY 70.1 billion from the end of last year, up by nearly 140%. When it comes to corporate annuities, by the year of 2019, our AUM of corporate annuities reached CNY 36.8 billion, up 35.2% from the beginning of the year. When it comes to occupational annuities, because of our overall advantages and brand advantages, the group has participated in the tendering of 29 provincial-level occupational annuities tenders and 29 investment management tenders. We have got good results. When it comes to reinsurance, we focused on becoming a high-quality company, we adopted market approach. We have been making efforts to create profits, we have been developing third-party businesses. When it comes to our reinsurance premium, it has been up by 17.7%. Third-party market premium income reached CNY 990 million, up by 17%. Our customers continue to increase. Our third-party customer coverage at home reached about two-thirds, we cover international clients from 34 countries and regions. That's my presentation. Now we enter into the question and answer session. The moderator, you have the floor. Thank you, Chairman Miao and Vice President Xie. Now we enter into the Q&A session. In the register, to ask a question according to the instructions of the operator. Before you ask the question, please identify yourself and your affiliation. In order to ensure more people can ask a question, please each one ask no more than two questions. Now the operator, could you bring the first questioner in? Should you like to ask question, please press the star and 1 on your phone. The first question from Sun Ting of Haitong Securities. Thank you for that presentation. I'm from Haitong Securities. First, in the year 2019, you generated impressive results in terms of life insurance and investment. Two questions from me. First, a regular question. What is the impact on your P&C business and life insurance by the epidemic? What are the impacts like, and what measures you have taken to mitigate the impact of the epidemic? The second question is about non-auto insurance. We have observed that in 2019, PICC's non-auto insurance has witnessed a high increase of its premium, but the composite cost rate has increased rapidly as well. How do you reconcile this situation? In the future, the non-auto insurance profitability, will it continue to increase, or will the combined ratio continue to remain high? The PICC P&C related question, please, you answer it, and we have someone else to answer the question relating to the impact of the coronavirus epidemic. Okay? Okay. Thank you, Ms. Sun Ting from Haitong Securities. The coronavirus epidemic has indeed had some impact on the PICC's PICC P&C business. By the end of February this year, our premium income stood at CNY 75.2 billion. This is a decrease, and this represents negative growth. The reason being the impact of the epidemic in China. Of course, last year we had particularly a rapidly expanding quarter 1, and that is also leading to this contrast. Looking at the breakdown, the auto stood at CNY 38.7 billion, a negative growth of 7.4%. For non-auto, CNY 36.6 billion in gross written revenue, also declining compared with last year. For agricultural insurance, for business, PICC P&C, and liability insurance, we have seen substantial decrease in the premium growth. For auto, this is largely due to the decline in new vehicle sales. To be quite frank, the whole auto sales have plummeted, and that has led to across-the-board negative growth on the auto side. The outbreak has led to lack of economic activities. Those operating vehicles, fleets have come to a halt, and their lack of operation has also driven down the sales on auto insurance on that side. For policy-driven insurance, many of the renewals were delayed, that has led to this decline in growth. Many local governments are focusing on epidemic control, that also put a hold on the renewal. Right now, the government is focusing everything on epidemic control around China. For the Social Security insurance and for agricultural insurance, we haven't seen this regular renewal that has led to this decline in growth. The logistics slowing down has driven down the productivity and the operations in multiple sectors. That has driven down our growth rate on the business PICC P&C and a decline of 13.6% on our growth in revenue. We have been relying on agents, the telemarketing sales team, to look for integration of the online models to maintain the steadiness of our operation. Also to stay compliant to the regulators' requirement, we have opened up a green channel for claim management to make sure that we will be able to provide solid service to our clients during the coronavirus period. Going forward, we would see this outbreak as a major driver for transformation of business model across the industry. It will act as a catalyst for digitalization of insurance. Everyone would need to build our online capacity so that we mitigate the impact of the epidemic, while at the same time respond to the customers' requirements. We want to build our new strengths and competitive edge by utilizing online platform. On the structural reform side, we are actively responding to the needs of the outbreak. We have developed new terms specifically designed to meet the needs of the coronavirus for medical insurance, illness insurance, and liability insurance are all areas of innovation that help us to boost our supply of products and extend the coverage of insurance. The later the ending of the epidemic, the greater impact we will feel as insurer. As the epidemic come to an end, we expect incentives to boost the sales in the auto sector. We expect to see a major surge in sales by then. For non-auto side, agri, for the liability for the governance-based insurance products would quickly pick up with their renewal. Seeing from March, the negative growth in GWP has been slowing down already. Going forward, with expected incentive from the national government with release of this consumption capacity towards the end of the outbreak, we would say the negative impact from the outbreak is under control. Its impact on profitability, seeing from where we are now, it's unclear. We haven't seen clear signals yet. Looking at the product line breakdown. For auto, we have seen lower claim ratio, mainly because of the traffic controls or restrictions has led to less vehicles on the roads. That's why we have seen substantial decrease on claims made on the auto side. Because the public have been worried about this epidemic early on, we expect to see pickup in use of vehicle, private passengers, in late March and early April. According to the national policy, the reimbursement and payout of many of the pension programs has been recalibrated to meet the needs of the epidemic. Many of the restrictions or previous requirements has been loosened up on the medical insurance side. We need to get prepared for the possible uptick in pension-based insurance products payout. We expect a significant impact on the macro economy from the outbreak, and that will further tighten the downward pressure on the economy. Some of the sectors, businesses, and consumers will feel the impact financially, and their ability to pay back their debt might be compromised. We will face greater pressure on risk management for those financing vehicles-based investment. If the residents and businesses continue to face these restraints financially, then we will be able to face a tighter environment. All the insurers would have to deal with a more contingent risk landscape. Given this possible rise in risks, we would need to match our portfolio accordingly. Last year, we have already made appropriate provisions of reserve. Going forward on the financing-based credit insurance, we will put a cap on the total credit insurance. Secondly, look for ways to support the recovery of production across different sectors, and we would also restructure the product mix to further optimize our client segments. Then we would particularly explore areas linked with consumption medical products, logistics services, and look for possible partnership. In the meantime, we will invest in the technology empowerment that would help us to cover the whole process of credit insurance. Thank you. I would very briefly respond to your question from the life side. The epidemic is bringing major disruptions to the traditional model of life insurance. We are not immune to this impact. Compared with our peers, we are slightly operating better, because in February, the key indicators, and particularly we have seen growth in the first year regular premium growing. We are above the industrial average by 26 percentage points in January. For February, our performance on the regular premium over a 10-year paying period is 59 percentage point higher than the industrial average. We have been innovating in ways of delivering our services. Particularly, we are now going full out on online performance, PICC app, and tests and forecasts are all some of the channels we roll out PICC Life product. We have looked into advanced experiences in this area to further implement technical-based solutions. We foresee short-term impact on the life segment from the outbreak, mainly because the long-term upward trend remain unchanged. After the end of the outbreak, we would even see greater opportunities for life. Many of the younger generations would reconsider their career options, their career decisions, and that give us opportunities to build up our team, develop our human resources. The general public would have higher demand for health-based insurances. Going forward, we will stay determined and committed to grow our business so that in quarter 2 and quarter 3, we will be able to make up for the impact in the first quarter. If I may, I would like to respond to your second question, Ms. Sun Ting. PICC P&C had a rapid expansion on non-auto, but we suffered an underwriting loss. I will explain why. It is true. Last year for PICC P&C non-auto segment, we had 30.7% rapid growth. Also the proportion of non-auto business increased by close to 6 percentage points. But on the underwriting profits, we suffered a quite clear loss, but we considered it as a temporary loss. Because these are losses felt in the credit, surety, agricultural, and A&H. The total loss amount to CNY 5.023 billion, mostly coming from the credit surety that was 2.88 billion, and for the agri, we have suffered a loss of CNY 1.012 billion. For credit, mainly that loss was driven by high commission and also high claims made. The claims increase was mainly due to the upward trend in credit risks across the board that has driven up the claims being made. Taking into account the downward pressure on the macroeconomy and rising uncertainty, the company has adopted approach to adjust our portfolio, and that's reflected in the reasonable provision of reserve. There is another factor in play for credit insurance, particularly those based on financing and refinancing. Usually, we would start by making the payment first and then look for ways to recover the losses. This recovery of loss happens later, so there is a time window there. So usually, it's quite common to see the upward trend in claims and later a decline. Particularly, this trend would be obvious during a rapid expansion period. Our loss for the A&H also drive up to increase by 23%, and our expense also grew by 3%, driven by the restructuring of our business. We have been seeing fast growth of individual insurance. The loss of agri insurance is because our combined ratio has went up by 8.1 percentage points year over year. This is due to the African swine fever and rains and drought and other major natural disasters. This year, when it comes to non-auto insurance, we will step up the management of policies and claim management, and we will strive to cut costs and increase the effective agent ratio. We will also strengthen the cost management in commercial insurance and increase our capabilities to acquire high-quality businesses. We will get rid of the businesses that we cannot change and has been loss-making for years. We will strive to turn loss-making into profitability. Agri insurance is an area where we want to seize the opportunity of the country for high-quality development of agriculture, and we will help with the implementation of the policies, and we will also use technologies and manage risks so as to increase the profitability of agri insurance. When it comes to Social Security, we will strengthen our capabilities with health insurance evaluation, and we'll also increase relevant standards and implementation of the policies so as to ensure that there is still some level of profitability. Let me add a few things here. Let me add one point. You're very interested in this question. As has been mentioned just now, last year we have saw huge losses in three areas. Credit and surety, which has been mentioned. That's periodic. Now we are in this period of high occurrence. In the future, we will step up our capabilities with the collection of premiums, and in the future, we will make improvements in this regard. When it comes to accidental injuries and health, last year our GWP has reached CNY 57.6 billion, and A&H reached CNY 8.8 billion. This business is profitable. Health insurance stood at CNY 480.7 billion. This is mainly from the Social Security business. The Social Security are mainly related to major illnesses. The characteristic of this business, well, it is based on the government's requirements. This is a policy-based business. We want to ensure slight profitability and the breakeven of profits and the payment. Last year, there is this integration of two insurance schemes. Some rural insurance schemes and poverty-related illness insurance has been extended, and coverage has been increased in this area. This is a policy-based business. According to the usual practice, in next year, there will be a review of the previous business, and adjustments will be made relating to the claim payment. This adjustment will come later. As you know, in Shandong, our major illness insurance saw a loss of more than CNY 500 million. Later, based on the government adjustments last year, this has been made up. In Guangxi, we also saw a huge loss, and the government has agreed to compensate us for that. This business is actually where we basically break even. Even there is loss, in the second year, when we negotiate with the government about the renewal of policies, adjustments will be made so as to ensure we can break even. Agri insurance. Last year, they saw huge fluctuations and losses. This is mainly related to the animal husbandry insurance. Agri insurance had a GWP of more than CNY 30 billion. The crop plantation account for just under CNY 20 billion. Their combined ratio is only 86%. This is profitable. Last year, despite some natural disasters, that has been profitable. While animal husbandry insurance accounted for about CNY 10 billion, of which the pig insurance premium is CNY 5 billion. Due to the ASF last year, we made claim payments of CNY 7 billion. The claim payment ratio is more than 140%. If you include the cost, then actually the payment ratio is higher. Last year, the agri insurance had this special situation. That is the African swine fever, which led to the increase of claim payments. As a result, the claim payment ratio of agri insurance increased. This year, this situation will be well under control. We are confident that the agri insurance in this year will continue to remain profitable. Let me say a few words. That is the answer to the first questioner. Next question, please. Next question come from Tianfeng Securities of PICC. You may now ask the question. I am from PICC. My name is Tian. Then two questions. First question for Chairman Miao. In 2019, PICC Group and PICC P&C has saw huge increase of EPS and the rate of dividend has saw significant rise. What are the reasons for the increase of dividend ratio? In year 2020 or in some year in the future, if your net profit has saw a decrease year-on-year, will you consider the increase of dividend payouts so as to ensure there is no drop of EPS? Second question, the credit and the surety insurance. In 2019, the GWP saw a significant rise, but the situation with investment is not good. What are the problems with credit and surety? Is this because you haven't considered some of the risks when issuing the policies? As has been mentioned, this is just a periodic situation. Can we expect that in 2020 the credit insurance will see a drop of payment ratio and will you control the increase of premiums in this business in 2020? The first question relating to dividends and EPS. As you know, this year our dividend payout per share has increased significantly, up by more than 150%. Why are we paying so much more dividends? On one hand, there's expectations from the investors. Our large shareholder, the Ministry of Finance, has this requirement for us to do so. This year, in 2019, we had good profitability, so we increased dividend payouts. Going forward, we will continue to keep this dividend payout ratio. We hope that the dividend payout ratio of PICC will reach the level of other central financial institutions. Even in 2020, when we see some fluctuations with our profitability, of course, until now, I don't see major changes. Even in the worst case scenario, even if there is fluctuations with our profitability, our dividend payout ratio will not go down. It will continue to increase. Second question relating to credit and surety. As you have seen, our combined ratio is rather high with surety. Just now, my two colleagues has explained to you about the reasons. Apart from the changes with the credit in the market, of course, if you look at our own situation, we need to further improve the issuance of policies and increase our risk management capabilities. This is something that I and our group pay high attention to. This year, we will strengthen our risk management relating to credit and surety, and take a more regulated approach relating to the issuance of policies. This is a major approach that we are going to take. Last year, our combined ratio was high. It was not because of the risks have not been represented, it's because the risks have been represented or manifested, and we increased the reserves or provisions for some products. On the other hand, when it comes to risk management, indeed, the grassroots agents have not been well-informed. In future, we will step up accountability as well as risk management. I'm sure that our credit and surety will see higher quality of its business over time, and we will meet our combined ratio in the long term. Thank you. Next question, please. Next question comes from Securities Times, from Liu Bingyan. Good morning. My name is Liu Bingyan from Securities Times. Two questions. First, about the price of the shares of PICC Group, and your H share price has been rather low, and this year the H share prices continue to go down, and it has reached the record low. What are your take for the drop of H share prices, and what measures have you taken? Secondly, related to investment, last year, your total ROI has witnessed significant increase. This year, what is the situation with investment this year, and what are your equity investment strategies? Our H share price is unreasonably low. Our P/E ratio is only about 4, and net earnings price is less than 1%. Of course, the drop of our H share prices is related to the overall drop of the Hang Seng Index. This year, due to the global pandemic, the financial markets represented by U.S. indexes has witnessed huge volatility, and Hang Seng Index also went down. The Hang Seng Index, when it comes to valuations, is rather cheap. Hang Seng Index, the P/E ratio is only 9.5, so it's less than 10. Its PB is about one. A week ago, the PB is less than one. I checked the historical performance of Hang Seng Index. When PB is under one, actually, there has been three times in the year 1996, 2009, and 2016, and every time after that, there would be a strong rebound. I think now our H shares are undervalued. It's very cheap. It's related to the Hang Seng Index. Another reason, this is because we don't have a large number of outstanding shares, so the liquidity of our shares are not high. We have also considered an approach of repo, but due to the low percentage of outstanding shares, if we do a repo operation, then the outstanding shares will not be able to meet the requirements of the regulators in Hong Kong. This year, with the recovery in the global markets and the recovery in the Hong Kong stock market, our price will rebound. This is a very good opportunity for investment. Our dividend payout ratio is very high, much higher than many of the best products. In the long term, I believe investing in PICC is an excellent opportunity. If you look at the domestic situation, last year, our ROI has saw some increase. Previously, the questions were also related to our ideas about equity investment. This year, the A shares market is one of the best performing markets in the world. Recently, due to the volatility of global financial markets, our A shares has been going down, but we're still confident about the stock price. On the one hand, there is improved institutions. The new Securities Law has been adopted. This is a very solid foundation. On the other hand, if you look at the long-term development of the Chinese economy, the long-term trend, the long-term robust trend has not changed. When it comes to the equity investment of PICC, I have this requirement. First, we need to seize strategic opportunities. When the market is going down, perhaps there are opportunities for strategic investments. Despite the market fluctuations, we should not panic. We also need to seize opportunities of different sectors amidst market fluctuations. In particular, the epidemic has different impacts on different sectors. Some sectors has witnessed huge impacts, others a bit small. In other sectors, due to their leading business models, they have even not been affected. We need to conduct more research of different sectors, and we need to seize the opportunities by the differentiated development of sectors, and we also need to seize strategic opportunities. Amidst market fluctuations, there's many opportunities there. Overall, I would say for this year, for equity investment, I have the aforementioned request, that is to take and seize these opportunities, as just mentioned. Colleagues from Shanghai at PICC AMC, any further comments to the second question? My name is Huang Benyao from AMC. Thank you for your question. Overall, we have already seen Mr. Miao Jianmin's comments on the directions and the general principles on equity side. Generally speaking, for this year, the impact from the European market, from United States, from emerging markets, we have seen major fluctuations already. There had been even 30% plummet in their stock prices. Some of the markets have even approached close to 2008 crisis level. Seen from the domestic market right now, the decline in the stock price is relatively moderate. That is reflection of the confidence in China's market and also China's efforts to combat this epidemic. For this year, we will stay prudent and look into still a strategy that focus on value investment while stay compliant with tight control on our risk exposures, on our risk bottom lines. That would be reflected in the equity investment proportion being tightly controlled. We would foresee controllable risks brought by the epidemic, and we would seize opportunities presented by different sectors, because right now the decline in our interest income is slower than the broader market decline. For equity, we will continue to contain the exposure to be within a reasonable range and also within what is acceptable range for the investors. Going forward, we will look for opportunities by these temporary strategic opportunities. We will still be focusing on domestic market. We will go through a reverse investment process so that we will be able to take the opportunities of a temporary readjustment of the market. We will focus on those with the best potential brought by technology empowerment, with 5G, with big data centers, with ultra-high voltage, transmission of electricity, artificial intelligence, intercity high-speed rail. The city rail network will all be some of the opportunities we're looking to. We will also pay closer attention to those segments that are closely linked to the welfare of the general public and the service for long-term opportunities. On strategic segments, we will focus on those that could potentially deliver synergies with insurance business, including finance service, medical and health service, the care of the elderly. Particularly, we'll look into the potential high-tech segments that could empower our main operations. That was an overview of our major thinkings. Thank you. Now, we will give the floor to the next question. We have a next question. Zhou Liyang from Securities. My name is Ge Lixiang. I have a question around life and health. We noticed that last year for PICC, the life and health contribute to close to 20% of the GWP that contributed to more balanced development. For PICC Life, embedded value grew by over 26%, and more than CNY 10 billion are coming from the investment return variance. I wonder if that improvement in embedded value is sustainable. Due to the lower interest rates, have you done any calculations to compare the investment return variance on the embedded value? How large that impact would be on the embedded value? That was for PICC Life. Second question for health segment. Last year, particularly for Q3, you see this contrast in profits for PICC Health. I wonder, for Q3 and Q4, what were the reasons for negative growth? Thank you. I will first respond to your first question very briefly on sensitivity test. in 2019, our return on investment was 5.23%. For the operating base test, it was 8.17%. Based on the sensitivity test, 50 BP decline would lead to a CNY 8.6 billion decrease in embedded value. If the risk discount reduced by 9.1%, then the embedded value will increase by 5.4%. Because the company hasn't combined the two assumptions into one test, I don't have data with me on the comparison by combining the two. On the embedded value's impact from investment return variance, I would foresee a stability, because even when the investment returns assumptions decline, they would not clearly affect the embedded value. Taking 2019 as an example, compared with the end of 2018, we have a larger decline in the assumptions. I'd like to respond to your second question, comparing Q3 and the full year performance on PICC Health. Last year for our group business, we had a negative value on the embedded value because these group business were mostly consisting of short-term A&H and pension. In certain regions on individual projects, we have seen problems with the quality of the business and the lack of specificity in negotiations with the government in some regions. That's why in 2019, we have increased the reserve on some of the pension insurance. Similarly, in certain areas, particularly A&H business, have seen problematic underwriting, and that is reflected in Q3 and Q4. We have already increased provisions in reserves to cope with these challenges. Going forward, on the Social Security businesses, we will tighten project-based management, improve the quality of underwriting process so that we will be able to have a two-way risk adjustment mechanism. By improving our actuary operation and also the containment of cost, medical cost, we will be able to continue to make a slight profit on this business segment. We will phase out those business segments that are poor in underwriting and poor in their profit performance. That will help us to further improve the group business segments while we strengthen our risk management capacity on the underwriting side. That will put us on a healthier track for group business. Thank you. Next question. The next one is from Goldman Sachs. Thank you. I have two questions. One is a follow-up on the sensitivity test. I wonder what would be the test for this year. You made a reference to the commercial business would contribute to less combined ratio. I wonder what are the specific arrangements. On commercial auto business, you mentioned that there has been increase in the GWP, but I wonder what would be the combined ratio like. Thank you. I will briefly respond to your first question. In 2019, for the life insurance, the duration was 11.14. For the sensitivity of the duration, we don't have such data. That's why you won't be able to find it in the publicly released data. If you're interested, I can connect you with our colleague from Actuary Department and you could follow up with this discussion. I understand that there is a strong interest into the 95% target on combined ratio for commercial business at PICC P&C. Last year, the overall revenue increase was driven by non-auto business. But alongside that growth, we struggled with quite a substantial loss. I understand that there is quite a strong interest in this area. If we break up the combined ratio, you would see that if we exclude the critical illness and agricultural business segments, then for last year, the combined ratio for commercial business was 98.8%. That was comparable to the previous year, 2018. For commercial business, there hasn't been drive up in combined ratio because of the expansion in revenue. Mainly because we had actually decline in combined ratio for the auto business. For commercial non-auto business, we indeed had an uptick in combined ratio. The reasons has been already briefly referred to already, mainly coming from credit and surety insurance. The rapid expansion in combined ratio for credit and surety insurance were mostly coming from those products on financing, and particularly for the inclusive finance vehicles from online platforms, they're expanding rather rapidly, and we are still catching up with risk management. Our colleague has already responded to previous questions by elaborating on the requirements on risk control on underwriting side for credit insurance. On commercial combined ratio target, 95%, it's mid to long-term target of the company. To deliver on that commitment, we will implement 3411 projects and the 10 priorities, particularly accelerate the transformation of business model. For this year, we are going to scale up efforts on the following areas to boost the profitability on the underwriting side. Firstly, we will be more selective on the underwriting risk to restructure or replace those poor quality business, and that means we will tighten the risk parameters on the underwriting side. Right now, our branches have already been implementing these risk control measures, as seen from the performance of the first 2 months. We had a negative growth, but that is also a reflection of the restructuring of products and the replacement of those poor quality business. Secondly, we will scale up efforts on tightening claim handling processes with the use of technologies that will help us to reduce loss and damage, including both auto and non-auto businesses. And that will be reflected in major decline in cost on auto side. In the future, due to the huge cost of claim handling, it is also a major direction. Non-auto insurance, when it comes to reduce loss, we will step up the management of the cost, and we will also work on our proprietary business as to reduce our sales cost, in particular, the underwriting fees and costs. We've done some analysis. Last year, our non-motor business has increased rapidly, but our underwriting costs have also surged. One of the reasons is that some of non-auto businesses are conducted through third-party platforms, including some of the credit and surety business. And this business has saw rapid growth, but it also has driven up our sales costs. So whether it's auto insurance and non-auto insurance, we need to accelerate our own independent and proprietary businesses. And we also manage all kinds of costs and fees amidst the downward economic growth. We need to step up the cost management in our mid-office and back office as to increase efficiency and cut costs. By implementing these measures, we are confident that while stabilizing our combined ratio, we will be able to ensure some decrease relating to combined ratio. Thank you. Thank you. Next question, please. Next question come from Citigroup. The name is Michelle Huang. Thank you for this opportunity. I am Michelle from Citi. Two questions. First, relating to the human resources of PICC Life. Last year in your open day, you mentioned that by the year 2020, you will reach an effective agent of 130,000. Now your total human resource has exceeded this target, and my question is, going forward, in particular, amidst the epidemic, how would you retain effective agents and use them? Last year, you invested more than CNY 2.3 billion in this area. This year, what will be your investments in this regard? And second question relating to the health insurance, you have been adopting digital strategies and expanding online channels. These are the two things in your top 10 priorities. So last year, you have started to work with online platforms and conducted experiments. My question is this business, how it is developing in terms of its growth, its claim handling and payment. So amidst the coronavirus epidemic, have you used the online platforms to grow your businesses? Thank you. Let me answer the first question about our investment open day and the data released on that day. By the year 2022, our total effective agent per month is at 200,000. Our individual insurance has 350,000 effective agents, and monthly effective agents is 130,000. So these metrics, I believe that overall it is good and it is higher than our expectations. The effective agent index has been reached, which has reached the target relating to the individual income. And we have monthly effective agent has reached 772,000. And there has been a year-on-year increase of 37.8% and 44.6%, respectively, with relating to effective agents. And also the individual insurance business, we have a few priorities. First, we will continue to advance the six projects relating to the development of human resources. Last year, I have briefed you on that point. These six projects including Beiyuan, Tianjin, joint business and standardized outlets, the improvement of sales team, and high quality talent in large cities, and other programs. These are the six projects. Investment on these projects will remain the same as last year. Secondly, launching the individual insurance related projects, we need to consolidate the management basis of individual insurance so that marketing management will be more regulated, systematic, and professional. In the past, many of our management activities have been fragmented. By launching the STONE project, we hope to make it more professional. This project has been announced in October last year, and by the end of this year, we want to turn it into a reality. There is a lot of activities involved, and it has already generated some results. Number 3, we launched tough battles in 45 cities, and we want to develop three teams. That is high quality, high caliber, high stability teams. In the year 2019, in large cities, we added more than 99,000 people, and the high quality talent accounted for 25,000 with their age under 45. This effort has resulted in a situation where in many large cities, we have generated good results. In particular, Beijing branch, the human resource has increased to 22,000. In some other large cities like Harbin, Wuhan, and Changchun, there has been a good situation, a turnaround, including in Shenzhen. In our Shenzhen branch, it has also witnessed major changes. Activity number 4, we will further improve and strengthen our prefecture-level cities subsidiaries and capacity. The prefecture-level subsidiaries will focus on individual insurance and human resource development. We do not want to do other activities. This is to concentrate our attention and improve our human resources team. We have been driving forward this activity. We believe that so long as we want to grow even stronger and bigger, we want to have robust prefecture-level city subsidiaries. We have been advancing digitalization and adoption of technology, and these will help us to improve the quality of our human resources. We have Yunbao Yitong, Yunbao Management, Yunbao Health. These are some of the apps and the programs. We also have 10 directions, which are charged with different senior management members. We hope that by using technology, we can facilitate the fast development of human resource team. Thank you very much. Now, let me answer your question relating to our health insurance and how it is developing its online business. Our online business was relating to PICC and health insurance. It has witnessed good growth. The average growth rate by March is 120%. When you look at the claim payment statistics, the payment is rather stable. PICC in-house, when it comes to our online business, I have three points to make. First, we have leveraged third-party Platforms. They have good traffic and technology, and good resources. Third-party platforms also used our own product development and operation management capabilities. By integrating the two expertise, we achieve winning results. In the past, some investors asked this question: Do we rely completely on third-party platforms? I always believe that our relations with them is a relation of interdependence. I use their traffic, and they use our products and management. So that is my opinion about online platforms. Going forward, while developing our online businesses, we will focus on the following activities. First, we will continue to deepen our cooperation with third-party platforms. We will strengthen the conversion rate and customer stickiness on third-party platforms. We also work with high-quality platforms through differentiated ways of cooperation so that ways of cooperation will become more diverse. Number 2, we will strengthen our online operation capabilities. Currently, the full-process online business will be further empowered by technology and enhanced operation management, as well as better and digitalized customer service. This will help us to improve customer insurance, customer service, and risk management. Number 3, we will continue to set up professional product lines in health insurance. We will develop online-based long-term and short-term A&H and healthcare major illness and chronic disease management products. We will also experiment with customized products. We will also continue to drive forward our proprietary platforms. We have this integration strategy and digitalization strategy, so we will use the PICC app and our e-commerce platform. These are the two proprietary platforms. We will use them to integrate our PNC and life insurance so as to deliver excellent services to our customers. When it comes to the impact on our online business, the impact on our business has been in a very stable situation. By March 27th, we have got the claims, which number 155. These include some questions related to claim payment. 22 cases have been filed, and we have made payments of CNY 244,000. One case is related to major illness. 5 of the cases, after our online assessment, the payment was made by the Social Security funds, so we have not made claim payments. Also, some of the payments are attributable to the payments of Dr. Li Wenliang. During his hospitalization and the treatment process, some of the claims were paid to him for his nutrition and other co-pay payments. So we are also watching imported cases and returning overseas students and people without Social Security and their proprietary or out-of-pocket payments. But until now, we do not have any cases being filed for claims. Thank you. Now the next question, please. Next question comes from Morgan Stanley. You may now ask the question. Good morning. I have only one question about dividend payouts. Over the years, you have been increasing the ratio of dividend payout. So my question is this. This sustainable dividend payout ratio, what is this ratio in your mind? What is the possibility for future hikes? In the year 2020, will the increase of dividend payouts be affected in this year? Dividend payout, I have talked about it previously. We want to continue to increase the percentage of dividend payouts so as to reach 30% in the end. This will not be affected by short-term business performance fluctuations. This is a rather clear target. Okay. In the interest of time, now the final question, please. Final question comes from Guotai Junan Securities. Thank you very much for the question to answer the final questions. A few questions, first relating to capital. I see that PICC Health has witnessed strong growth. But your solvency ratio, what are your capital arrangements, and how do you balance profitability and capital? Your ROE is rather low. Another question. On capital arrangement, do you foresee an impact on the capital adequacy? Second question is around life, because some previous answers involve arrangement for the catch-up in the next 2 quarters. I wonder if you have plans for campaigns or expenses arrangements to boost the sales on life side. The follow-up question has been referred to in previous questions, but I have additional comments on credit insurance and surety insurance. I wonder what is the duration of most of your products, credit products. I will first respond to your question around the solvency for PICC Health. in 2019 and on, we have seen rapid expansion on online business. Compared with year-end of 2018, we had 80 percentage points decline in solvency ratio, mainly driven by 2 factors. Firstly, based on the solvency requirement from the regulator, the per policy assumption has been rather high traditionally, but for online business, you have large volume but a small amount for each policy. That will quickly eat up into our solvency preparation. Prior to the first of this year, we had communication with the regulator already specifying the features of online products, so we reached a consensus on arrangements already. We would foresee a separated arrangement for online businesses because there would be follow-up adjustment to the expenses, or the product assumptions on this very particular type of product. This announcement is delayed by the outbreak, but a consensus was reached. From this year, we have further increased our solvency rating from level 3 to level 2. That will have an impact on the actuarial assumptions and the calculation of the margin. Going forward, our solvency will stay sufficient because we have looked into our Q3 and Q4, it will stand around at 200%. Going forward, we expect to keep a solvency ratio above 20%. We are confident about that. For the capital adequacy, we would follow the strategies of the group while accommodating the needs of our own business section, while in the meantime, we would dynamically adjust our capital to meet the regulatory requirements with multiple vehicles to raise capital. We will be able to adapt to changing requirements to stay solvent. I will briefly respond to your second question. On life profitability, as you may have noticed, with 5 years of transitional efforts, we have already seen many major operation indicators and financial indicators performing much better than the initial predictions of our models. The actual performance are much better than what we have initially anticipated from our model calculation. We have seen rapid growth in value business. The GWP also grow quite substantially. That is important on the regular premium, first payment, particularly for the rapid expansion in those products with more than 10 years paying period. Many good news. In a matter of a few years, we had a tenfold increase on the GWP. We are close to CNY 50 billion on the GWP already. Starting from last year, we have seen this very interesting transition in some of the pilot programs. Seeing from the publicly released data, you could see that on one hand, we have rapid expansion, but we also have huge input into the growing of the business. That eating to our reserve last year, but we foresee improvement in this year. I would say the company is on the right track. As we go forward, we will stay determined and committed. I would say all the major critical steps have been taken already, including team-building efforts. A major development last year will be carried forward this year. I am under the impression that with this year's efforts, we will be able to even consolidate our team further so that we will be able to navigate the future in a more solid manner. I will respond to your question around the credit and the surety insurance. Indeed, we had a rapid expansion year, and the loss has attracted a lot of attention from the investors. I have a few figures to share. For PICC last year, GWP was CNY 27 billion, up by 96.7%. Looking at different breakdowns for the credit surety businesses, we have those based on financing vehicles and the non-financing segments. For the financing-based credit insurance, they stood at CNY 21 billion. For non-financing credit insurance, they stood at CNY 1.7 billion. Seeing from the quality of business, I would say for non-financing credit and surety insurance, they have traditionally been very good with the quality of the business. Last year, we had CNY 200 million profits. For this non-financing product, these are where our traditionally strength lies, including export credit, including quality surety products. We had a quite good year on this front. We will continue to grow these non-financing surety and the credit business to further innovate with products and increase the proportion of this business. On credit, the financing-based credit insurance, and specifically to your question around the duration. The majority of the business out of the CNY 21 billion or around one year, 70% of the business last for one year. Only around 30% of these insurance are multi-year period, mostly two year, very occasionally three-year duration. On the risk management side, starting from last year, Q4, we have been looking into financing-based credit and surety products with tighter exposure control. So in Q4, we were able to bring this growth rate of this particular segment under control. So that is why in Q4, we had quite a substantial negative growth in the financing-based credit insurance. For this year, we will continue to tighten our risk management on this segment with stronger rules on the access to such services. We will further break down different platforms and with quotas set on different segments of the business. In the meantime, more broadly for financing-based credit insurance, we will put a cap on the total risks incurred, and that cap is going to be reflected in different segments of this product category. Particularly for online sales, we will focus on underwriting risk control and assessment of each policy so that we will be able to beef up our capacity on risk control. Because last year, we had rapid increase in claims made, and that is linked with the key feature of the product. Because once the claim criteria is met, we will first make the payment, and then with follow-up measures to recover the losses. So this year, we will start up our efforts to recover losses afterwards to help us reduce the damage and the loss so that we will be able to have better sustainability on this business segment. Thank you. That concludes our Q&A session. For quite some time, we have been making efforts to respond to the call of the CSRC and the Shanghai Stock Exchange for the protection needed for small and medium investors. On March 23, we made a public announcement to solicit questions from investors. We have received so many feedbacks already, and many of them has been referred to and answered for in our Q&A already. I'd like to particularly highlight two areas of keen interest for medium and small investors. Firstly, a lot of attention given to dividends. The senior management of company takes investors' interest very seriously. Ever since IPO in 2012, while accommodating the need for sustainable development of the company, we have been making all the efforts to improve the level of dividends paid out so that investors will be able to share the benefits of growth of the company. In 2019, the proposed Cash dividend per share was at RMB 0.116, an increase of 154% compared with 2018. If we look back into the whole journey, we had a dividend per share growth by 63% per year in CAGR. Going forward, as we further implement 3411 project with steady development in PICC P&C, better profitability of PICC Life, we will even strengthen the fundamentals of our operation and better create value. Going forward, while we're taking into account of the need for capital to grow, we will scale up our dividend cash payout, either through improving the percentage of dividends or through more frequent payout, so that we will be able to rise up to the level of the publicly listed financial institutions and allow investors to share the benefits of our achievements. Secondly, I understand that we have a strong interest into the stock price, and many recommendations were made on the management of the market cap. I appreciate your interest and attention. Chairman Miao and Vice President Xie already briefed us on what we had been doing in 2019 with this overall pace of development and this seek of progress in steady growth. We had solid implementation of 3411 with performance generated from three subsidiaries, and that also contributed a total GWP of RMB 555.3 billion, growing by 11.4%, with RMB 22.4 billion of net profits attributable to all the shareholders, up by 66.6%. ROE also up by 13.4%, an increase of four percentage points. But due to the fluctuations of international capital market, H share is clearly undervalued. As I mentioned earlier, we will pay greater attention to the interest of investors to make sure that cash dividends are paid out without compromising our capital needs for development. In the meantime, we'll further implement our strategies to grow our performance and also scale up our outreach campaigns so that more investors will be able to recognize the real value of the company, and that will push our stock price back to reasonable range. Thank you once again for your attention and the support to PICC Group and PICC P&C. That concludes our results announcement conference. Thank you.