Ladies and gentlemen, good morning. Welcome to New China Life's 2021 Interim Results Announcement. I'm Gong Xingfeng, Vice President, Board Secretary and Chief Actuary of the company, also today's moderator. First, please allow me to introduce the management team here with me today. They are CEO and President, Mr. Li Quan, Vice President, Mr. Zhang Hong, Vice President and CFO, Mr. Yang Zheng, Vice President, Mr. Li Yuan, and Vice President, Mr. Yu Zhigang. Today's results announcement has two parts.
The first is the presentation on the first half performance, and the second is Q&A session. Simultaneous interpreting will be provided. Friends who dial into this conference, if you want to raise questions in the Q&A session, please press star and one. Now, let's come to the presentation part. Mr. Li Quan will brief you on the H1 performance and future outlook. Mr. Yang Zheng on financials and investment. I will introduce the embedded value part. Now the floor is yours, Mr. Li Quan.
Thank you, Mr. Gong. Ladies and gentlemen, good morning. Welcome to NCI's 2021 Interim Results Announcement. First of all, I'd like to brief you on the overall performance. In the first half, although we encountered a lot of headwinds, NCI still achieved some highlights. First, the GWP was RMB 100.6 billion, up by 3.9%. It rose steadily and the 25 months persistence ratio remained flat at 85.8%, up by 1.2 percentage points. Embedded value RMB 250.7 billion, up by 4.2% compared to the end of last year. Total assets RMB 1.02 trillion, up by 1.8% compared to the end of 2020. Net profit attributable to shareholders RMB 10.5 billion%, up by 28.3% year-on-year. Annualized total investment yield remains trailing. It was 6.5%, up by 1.4 percentage points.
When developing life insurance business, we also actively shouldered our social responsibility. For environmental protection, we adopted a low-carbon approach to address climate change and promote ecological civilization. In office decoration, we follow the principle of modest decoration and energy saving in all aspects to improve efficiency and reduce consumption. In our daily operation, multiple steps were taken to cut emissions and save food. In the business conducting, we use mobile platforms for marketing, operating, and customer service to cut the paper use. Also, we are actively fulfilling our social responsibility. In July this year, a torrential rain and a flood hit Henan. To help them with flood relief and post-disaster reconstruction, we decided to donate RMB 1 million. In H1, to rejuvenate countryside, we spent RMB 8.3 million in Guizhou Shibing. Also, in the first half, we provided nearly 840,000 sanitation workers with insurance.
From 2017, the total claim payment reached RMB 22 million. In the second half of this year, under the guidance of high-quality party building, we will remain true to the essence of insurance, continue to optimize products and services, strengthen technological empowerment, and strictly control risks to steadily advance annual targets. First, accelerate the transformation of our teams to improve the quality. Ensuring the quality of new recruitment and continue to recruit more qualified agents. We will also provide more tools, training, policies, and take other measures to cultivate high-quality teams. Second, optimize product offering and improve coordination. Adopting a customer-centered approach, we continue to optimize product mix and align the resources of old age care and healthcare industry to expand our service scope and also to improve the product attractiveness. Third, foster innovation and strengthen technological support.
We stepped up research on business innovation and application to gain more support from technological tools and to improve the operation and management capability. Four, to strengthen the risk control and practice compliance operation. Prevention comes first in risk control. We strengthened the compliance culture education and supervision, also to make everyone play its part and play its role, to improve our capability to monitor, identify, and to firmly control the risks. Next is the insurance business part. In the first half, we tried to seek progress while ensuring stability, made efforts to build professional distribution network, and enhanced risk prevention. All types of business remain on track. FYP for long-term insurance business, RMB 30 billion, up by 0.5%. Renewed premiums, RMB 66.9 billion, up by 6.9%, accounting for 6.6% of GWP. This is a solid foundation for rapid premiums growth.
Premiums from short-term insurance business, RMB 3.6 billion, down by 16.3%. By different channels, individual insurance channel contributed RMB 69.9 billion premiums, up by 5.5%. Bancassurance channel, RMB 28.9 billion, down by 0.7%, accounting for 28.8% of GWP. Group insurance channel, RMB 1.8 billion, up by 21.5%. For individual insurance channel, it stepped up efforts in customer management, explored ways to support marketing. FYP for long-term insurance business, RMB 10.2 billion, down by 1%. Renewal premiums, RMB 57.6 billion, up by 8.6%. Premiums from short-term insurance, RMB 2 billion, down by 28.8%. For the agent team building, the traditional marketing model get tumbled in the insurance industry. We actively explore the transformation of such models and dismissed the unqualified agents. The agent headcounts, 441,000, down by 16.2%. Monthly average number of qualified agents, 105,000, reduced by 22%. Monthly average qualified rate, 19.1%, down by 7.3 percentage points.
For bancassurance channel, we deepened cooperation with important partners and boosted the growth of regular business. FYP for long-term insurance business, RMB 4.7 billion, up by 28.5%. Renewal premiums totaled RMB 9.3 billion, down by 2.6%. From different products, the participating insurance contributed RMB 36.3 billion, down by 9.3%, accounting for 36% of GWP. Health insurance, RMB 33.3 billion, up by 4%, accounting for 33% of GWP. Traditional insurance, RMB 29.9 billion, up by 26.9%, accounting for 29.7% of GWP. For the business quality, the quality remained stable in the first half. The 30th-month persistency ratio, 88.8%. 25-month persistency ratio, 85.8%, up by 1.2 percentage points. The surrender rate, 1%, up by 0.3 percentage points. That's all for the insurance business. Now I'll give the floor to Mr. Yang Zheng to introduce the financials and investment part.
Thank you, Mr. Li Quan. Next, I will introduce the financials and investment of the company. First is the revenues. The revenue of the company is RMB 130 billion, up by 12.3%. Net written premiums and policy fees increased by 4.1% to RMB 99 billion. Influenced by the increase of investment yield, which is up by 47.2%, the investment income increased by 12%. The expenses is in line with the company's business. Net profit totaled RMB 10.5 billion, up by 28.3%. Earnings per share was RMB 3.38. Next, let's see the investment performance. In the first half, the company, in face with the complex and severe market conditions, the investment focused on our core business indicators and realized certain results. Firstly, the investment asset reached RMB 979 billion, up by 1.4% compared with the end of last year. The annualized total investment yield was 6.5%, up by 1.4 percentage points.
Annualized net investment yield was 4.5%, down by 0.1%. Next, let's see the investment portfolios. The asset allocation of the company compared with last year remained stable. We can see for the changes of various items is within a 1% change. The term deposit accounting for 13.3%, up by 0.6 pt. The debt financial asset totaled RMB 559 billion, accounting for 57.2%, a slight decrease. This is the major asset allocation of our company. The bonds trust products, deposits, and asset funding funds are all stable. At the same time, the company strengthen the research of the debt products. The overall credit is within control, and the equity financial asset reached RMB 280 billion, accounting for 21.3% of total investment asset, maintained flat. The company focus on value investing and absolute return, grabs the structural opportunities to realize the sound yield.
For the non-standard asset investment, the company has shared our investment philosophy with the investors. We have continued to stabilize our non-standard asset, but the volume and proportion has decreased. The total non-standard asset totaled 227 billion, a slight decreased proportion in the investment asset. The debt investment accounting for 71% and the equity investment accounting for about 30%. The company has good quality of the non-standard asset with the credit within control. Next, I'd like to share the solvency margin ratio of the company. By end of June, the core solvency margin ratio of the company is 260%, down by 7.75 pt. The comprehensive solvency margin ratio hit 269%, down by 8.17 pt. That's all for the financials. Next, let's welcome Mr. Gong Xingfeng to introduce the embedded value. Thank you.
Thank you, Mr. Yang Zheng. Next, I would like to introduce the embedded value of NCI. By end of June this year, the EV of the company continued to rise, increased by 4.2%, raised from RMB 240 billion to RMB 250 billion. Among those, the value of the insurance business increased by 2.1%, up from RMB 93 billion to RMB 95 billion. Adjusted net worth grew from RMB 147 billion to RMB 155 billion, up by 5.6%.
For the analysis of the EV, we can see in the first half of this year, the major contributors to EV growth were NBV and expected return, which contributed 2% and 4% to EV growth respectively. Next, let's go to the VNB. In the first half, the VNB of the company totaled RMB 4 billion, down by 21.7%. FYP-based VNB margin was 12.2%. APE-based VNB margin was 12.2%. That's all for the embedded value. Thank you.
That's the end of the presentation part. Let's come to the Q&A session. Due to time limit, please raise only two questions and tell us your name and the institution you represent. Now, we are ready to take your questions. Ladies and gentlemen, this is the Q&A session. If you want to raise questions, please press star and one and wait for your name to be called. Thank you.
Thank you, management. I'm Zeng Guanglong from Zhaoshang Securities. First, congratulations on the management results. I have two questions. The first is on the liability side. As you mentioned in the presentation part, the insurance industry encountered some headwinds. I want to ask about the agent development since you achieved a lot of headcounts growth last year. This year, we see a huge drop in the headcounts. What's your outlook in the recruitment in the future, and what measures will you take to prevent the further drop of the headcounts? The second question is about the asset management. The H1 performance is quite sound and good. We can see there are some diverging trend in asset markets and the sectors. How do you judge the equity market investment? Thank you.
Mr. Li Yuan, please answer the first question.
Thank you for your question. In the H1, indeed, the whole life insurance industry had a good start, a disappointing trend, especially in the April, May, and June. We think there are several reasons. The first is the recovery from the pandemic is slower than expectation. It hit hard on the life insurance industry. The second factor is the stringent regulation. China's regulatory authorities put higher bars and standards on the agents building. The third is the marketing mechanism in China. Actually made a lot of contribution in the past three decades. Right now, it has to change according to the circumstances and also customers' needs. Now we are entering a period of pains. I think there are four mismatches. The first is the age of our agents is mismatched with that of our customers. Most of our agents are born in 1960s and 1970s. Our customers are much younger.
Most of them are born in 1980s and 1990s. They have different mindsets, there is a mismatch. It's very hard for them to communicate. The second mismatch is the product. The product supply is not aligned with the customer's need. In the past, we may focus on one single product. Most agents sell these products to customers. Right now we can see there are some individualized and personalized demands from customers, which is very hard to satisfy. The third mismatch is the marketing scenarios. We know young people, they prefer shopping online. They like visual interactions. Now we still focus on offline marketing, though we have advanced our technology advance. Top peers and also other large media companies also find it very hard. We still focus more on face-to-face marketing and conduct some salons and offline activities. The sales model is changing.
The fourth is the income of agents and their retention is not matched. In the 1990s, when we started this marketing model, the income of them were RMB 2,000-RMB 3,000, which was very high at that time. After nearly three decades, the average income still remained flat at RMB 3,000-RMB 4,000, which is relatively low in today's society. It's not good to the retention of the agent team. We can see from the above-mentioned three aspects and the four mismatches. The individual life insurance channel was hit hard. That's why some indicators you mentioned see a drop in the first half. Faced with these challenges, we took active measures. We have three steps. First we have three attitudes, actually, but we choose to respond actively.
First, we dismiss the unqualified agents in following the guidelines of regulators and make sure the headcounts, premiums, and structures are all free of fraud. Second, for the new recruitment, we strengthened higher standard and criteria to seek agents that is younger, more professional, and living and working in urban areas. Third, we grasped the opportunity to make short-term health insurance customers to buy new policies. To engage more customers and agents use this activity. We encourage them not to renew their short-term policy, but to buy new long policies. We also provided some specific financial input to this activity so that we can inject more confidence in this growing market to encourage them to visit more customers. At the same time, we stepped up our efforts to conduct customer activities. For example, the campaign, Jogging with NCI. Jogging with New China Life.
If you are familiar with our activities, we invited Mr. Su Bingtian, also the athlete, to be the guest of our Jogging with NCI activity. We also build some platforms to keep interaction and engagement with our customers so that we can make our customers know the company and our products better, and to create opportunities for the interaction between agents and the customers. In this first half, the excellent agents and the manager-level agents, as well as our structure, remained stable against all the headwinds. You mentioned marketing channel and team building. We still focus on the four approach. Marketing through our policies, atmosphere, responsibility, and also activities. I mentioned that we prefer agents which is younger, professional, and living in the urban areas. We provide products with full coverage targeting at whole family, and to cover the protection from the birth to the death.
We want to build a new ecosystem of our marketing. In the past, the marketing ecosystem focused on the headcounts and product. We think these two can ensure a rosy sales. Right now, we shifted to technology, services, and the product. Technology comes at first. We made some efforts to acquire customers from internet and to engage customers who know NCI well and recognize our products. We launched plans and incentives targeting at specific customer groups. Last, I want to say, we will strengthen training and to cultivate more excellent agents. We know some agents, they know nothing about insurance. They don't know how to sell. Training is very important. We have two training program. One is for new recruit and the other is for managers. We targeting at 3,000 and 5,000 agents.
We believe in the second half of this year, we still see opportunities among challenges. We will abide by laws and make sure the headcounts, premiums, and the structures are true. We will take some innovative steps, enhance training, provide financial input. We believe with all these moves, we may make some progress. Thank you.
For the equity market divergence, Mr. Yang Zheng, please answer this question.
This is a very good question. Equity investing is very important to the asset management of NCI. It has a huge influence, though it has a limited size, especially during the fluctuation of equity market. It may attracted a lot of attention from you. From our fundamental strategy, to simplify it, equity investment have three impact. First is duration, the second is return, the third is fluctuation.
For duration part, short equity investing is a little bit shorter than required. I have to correct myself. Equity investing has a long duration. Its return characteristics have to follow the guidance of the government. Also, we have to seek high-quality targets and alpha returns. This is what we want. That is the long duration and an excess return. Third is the fluctuation. This may seem negative to you at the very first glance. The fluctuation of equity market is not a bad thing. It is a neutral phenomenon. How to leverage the fluctuation of the market and to meet our strategic asset allocation target is a key area. Equity investing is a very important tool. Duration, return, and fluctuation. These are the three key roles equity investing played. We can see in the first half, we achieved rosy results.
In the second half, we will still follow these three objectives. To prolong the duration, to generate higher return, and to use fluctuations to serve our objectives. We can see right now, China's economy and the performance of different sectors, industries, and corporations, they diverge in different ways. Some changes are within our expectation, but most of them actually took us by surprise. NCI has accumulated experience to cope with the short-term fluctuation and to grasp the medium to long-term trend. We will leverage these advantages and to grasp our opportunities in asset allocation, sector selection, and security selection, also to serve the return objective through short-term fluctuation. Equity assets, especially in short-term period, as you all know, is very important to company's performance. We will follow our established strategy and to grasp market opportunity. Thank you.
Let's welcome the next question. Ladies and gentlemen, this is the QA session. If you want to ask a question, please press star one and wait for your name to be announced. Thank you. Next question comes from Liu Qi from Guangfa Securities.
Thank you for this opportunity. I have two questions. First is, we can see the NBV and the NBV margin has increased for the bancassurance channel. We can see the peer company has strengthened the focus on bancassurance channel. I want to know your strategy in bancassurance channel and your advantage? The second question is that the persistency ratio of 13 months has decreased by 2.2 percentage points. The 25 months persistency ratio increased. I want to know the reasons for that? We can see the 25 months persistency ratio decreased for the peer companies, yours are increased. I want the reason. Thank you.
These two questions, let's welcome Mr. Li Yuan to answer.
For the first question about the bancassurance channel in the second half of this year. In the first half of this year, the bancassurance channel performance is sound in the market. In our peer companies, the distribution channels has realized a good performance. In the second half, we will continue to follow our three operations, namely distribution, team, and customer operations. We will follow our strategy of promoting regular premiums with single premiums. The single premium of our company has a similar and decreased target compared with the last year. With their strategy, the FYRP has increased. In the second half, we'll follow our prescribed strategy. In terms of wealth management business, we will consolidate our team building, strengthen trainings, and provide more support to the sales of high-value products.
That's the first point. The second is about the persistency ratio of 13 months and 25 months. We can see the increase of 25 months persistency ratio shows that they stabilize the team, the sales of products, and high-quality business contributed to this result. We can see the 25 months persistency ratio increased. The company attached importance to the quality management. We excluded the surrender policies and premiums in the business supporting schemes. For those institutions who haven't realized the target of persistency ratio, we have some punishment measures. With those efforts, we can see the 25 months persistency ratio increased. For the 13 months persistency ratio, in the first half, it has decreased in the first half of this year. We think that trend is in line with the market.
The reasons are that first is because of the pandemic, the economy hasn't recovered. Last year, we prioritized stabilizing the team, so there are some issues about the quality, and the business of quality has decreased. For the second reason is we can see the renewal premiums and the willing for paying renewal premiums of customers has decreased. These two reasons contribute to the decrease of the 13 months persistency ratio. NCI also have take measures to cope with that problems. We have conducted specified meetings to cope with that problems. For the products with weak persistency ratio, we will strengthen our supervision and promotion, and we will punish those who have weak and bad performance. To conclude, we have conducted multiple measures to cope with those problems. Mr. Li Quan want to add to the bancassurance channel.
Mr. Li Quan said, "I agree with Mr. Li Yuan. bank insurance channel has realized positive growth and conduct effective measures after the new management took office in 2019." Last year, I've shared with you about my philosophy about bank insurance channel. We will develop the bank insurance channel in a bigger picture. We strive to improve our management level, reduce the cost, and improve the value of bank insurance channel. We have been continually follow our set strategy, and sound results have been received. In the future, we will strive to grow the bank insurance channel continually. Thank you.
Next question, please. Ladies and gentlemen, this is the Q&A session. If you want to raise questions, please press star one, and wait for your name to be called. Thank you.
Thank you management for the opportunity to ask a question. Just now, you have answered and cleared a lot of my doubts. We know that the change of customers has posed challenges, and many companies are seeking new growth points. You mentioned the wealth management strategy. Could you please update in this regard? Thank you.
Thank you, Ms. Mao, from CICC. Since we took office, we proposed the strategy called one plus two plus one. First, to build NCI into the best financial service groups that provide all-round services and are customer centered. The 1st is the life insurance. The two is old age care, health care, and another one is for technological empowerment. From the execution result, we can see this strategy has translated into actions. First, in the life insurance business, our foundation and the basis is solid. We have professional channels and products and services
To cope with this year's uncertainties and difficulties, we are exploring transformations of marketing mechanism and strengthen the coordination among different industries. We just presented you with the H1 performance. The GWP is RMB 100.6 billion, up by 3.9%. The growth rate is not high compared with last year. Against the backdrop of this year, it's a hard-won result. Renewal premiums accounted for 67%, a major contributor to the GWP growth. For wealth management, we have put in place a mature model that align our asset side with liability side to leverage the advantage of asset management and to support the steady growth of liability side. The investment yield is quite rosy and cheering. The annualized total investment return 6.5%, up by 1.4 percentage points. For healthcare and elderly care industry, now we have set up multiple elderly care communities in different cities.
We have three communities named Lexiang, Yixiang, and Zunxiang. These communities helped contributed RMB 1 billion premiums. In health industry, we have served 110,000 clients for health checkup. For technological empowerment, we have strengthened our technological support. To expand the technology application, we have launched the core system. To cater the needs of our agents and agent team for the marketing. We also launched the Cloud Wing program to optimize customer experience. These are some results we yielded. Thank you.
Ladies and gentlemen, this is the QA session. If you want to raise a question, please press star then 1 and queue in the line and wait for your name to be announced. Thank you. Next question comes from Mr. Li Da from CLSA.
Thank you for this opportunity. I'm Analyst Li Da from CLSA. Just now, the management team have answered a lot of questions. I have two questions. First is you've mentioned this strict regulation in the market. What regulation policies could we expect next year? Can you expect some regulation policies that may impact the business in the short run? The second is about the aged care. We can see in the market, there's a new state annuity insurance that will be established. I want to know your comment on that. What do you think of the traditional life insurance companies participating in this business?
Let's welcome Mr. Li Yuan to answer these two questions.
First is about the severe regulation policies. The regulators in the past two years has introduced the policies in line with the country and the whole national economy. A lot of policies has been introduced. For us, we believe in the future, in terms of product supply, the distribution model, and the agent team, new policies might be introduced. For the regulations, we think it will be a new normal for the regulation. Now, the economy of our country is heading to high-quality growth. The regulators should, based on the current development model and level, to regulate the industry and promote the industry's return to the essence of life insurance and maintain high-quality growth. The second you've mentioned about state annuity company. This is a new topic and hotspot recently.
I think the state annuity insurance company is new. A lot of its future business and the supporting policies haven't been released. For me, first of all, I think it shows that our country prioritizes aged care, and the country has, in a macro level, strengthened the role of aged care companies, and hope the banks should play a more important role in this regard. In the future, I think it's a priority in terms of the national strategy. The second, for the life insurance industry, we think we should focus on our own business and seek the comparative advantages. For life insurance business, we have our advantage. I believe we have three advantages. First is in product design, we have a guaranteed rate for the product, which is a comparative advantage for us.
The second is life insurance industry has accumulated a sound pricing model and risk control mechanism in the long run. Life insurance business has also accumulated wealth management capabilities of long-term assets, which are pivotal to aged care industry. For NCI, we believe we will attach importance in this field and also the possible regulations that might be introduced by the government. Such as the tax support policies or how can the insurers participate in this regard. We will focus on three aspects. First is, we are one of the six pilot institutions of exclusive aged care annuity insurance, and we will actively participate in this regard. Second is, we will try to accumulate experiences in our pilot programs. The second is we will enrich our aged care products and service supplies. We will provide long-term annuity insurance, care insurance, et cetera.
We are planning to introduce the monthly paid annuity insurance to meet the demand of customers. The second is we will improve our layout in the aged care industries and form sound synergy and coordination with life insurance business and to form our sound ecology. That's all for the answer.
Next question. Ladies and gentlemen, this is the Q&A session. If you want to raise questions, please press star and one and wait for your name to be announced. Thank you.
Thank you, management. I'm Zhao Yao from Guosheng Securities. I have two questions. The first is about the basic policies of the agent team. We know you launched a new policy last July and now the industry environment has changed. How do you reflect on the new policies and what is the pros and cons? How do you improve it? The second question is about the old age care and health care. We noticed that you have three elderly care communities. What is the operation and profitability of these three pipelines, and what's your future outlook?
Thank you. Mr. Li Yuan, would you please answer the first question?
Thank you for the question. The new agent team policy was launched last July, and we see three features. First, the new policy strengthened the culture of promotion to consolidate the foundation of the pyramid. The foundation is our marketing group. The upper level is the marketing division. We try to consolidate the whole structure layers by layers through promotion.
Now we have about 600 supervisors, 6,000 divisions, and 30,000 groups. The second feature, it strengthened the cultivation of excellent agents. From the very beginning, when we recruit the agents, we set high bars and criteria. We divide it into two directions. The first is excellent recruitment, and the other is common recruitment. For excellent recruitment, we prioritize their education background and their ages. Also, we provide some measures. For example, the training of Excellence 5,000, elite clubs, and elite summits for these teams. These measures help to stabilize excellent teams. We have to say, last year the total head count reached 600,000. This is a result yielded by the new policy. Both promotion and consolidation. For the future, how do we update the new policy? I have to reiterate that new policy is the cornerstone management tool for the whole company.
According to our schedule, we don't have amendments to the new policy. We have noticed some difference. First, the market environment is different. Second is our emphasis on the excellent agents training. We have to step up our efforts in this regard, the layers of the pyramid will be streamlined. The hierarchical level will be simplified. Thirdly, we put more emphasis on the agents who are younger, more professional, and working in the urban areas. This is a new trend of our team building. That's all for the question. Thank you.
Mr. Zhang Hong, would you please answer the second question?
Thank you for your question and your support and attention in this regard. Mr. Yu Zhigang just mentioned healthcare and elderly care industry actually show its initial effects. We have formed multiple elderly care communities in different cities.
In the first half, the operational indicator remains stable and the business are stable. Our constructions are proceeding smoothly. For some details, you mentioned we have three communities. In Beijing, we have Zunxiang community in Lianhuachi, and in Hainan, we have Lexiang community. These two communities are put into operation. The Yixiang community, which is still under construction in Beijing, Yanqing District. This construction project were undergoing smoothly, and phase 1 construction is expected to complete by the end of this year. On 28th May, we had a debut ceremony. Over 100 potential clients have visited our Yanqing community. This is the brief introduction of our elderly care communities. On the other side, to better serve our strategy, we have Xinhua Excellence Hospital, and also we have Xinhua Excellence Health Investment Management Company. It has set up 19 healthcare centers around the world.
The elderly care and healthcare program has stable operation indicators and business. For the future, we will make more efforts and provide more inputs. We try to set up more programs in Beijing, Tianjin, Hebei Province, as well as Changjiang River Delta and Zhujiang River Delta to build NCI's own ecosystem. We want to boost the effective synergy between elderly care, industry, and life insurance to strengthen our profitability. Thank you.
Ladies and gentlemen, this is the QA session. If you want to raise a question, please press star and one and wait queue in the line to wait for a name to be announced. Thank you. Next is Mr. Zhang Qinw ei from Huachuang Securities.
Thank you for the opportunity. I have one question. For this setbacks of the sales of health insurance business, the long-term insurance is pivotal to the growth of product. Now there is increment whole life insurance, which is popular in individual insurance channel. I want to know your product strategy in the next stage and the outlook for NBV margin.
Next question is invite Mr. Gong to answer.
This is the second year after the outbreak of the pandemic. The pandemic has a huge influence on the industry and people's lives. This year, there are many challenges for the industry.
The core for that is there's a mismatch between the life insurance supply and the people's demand. In the previous years, there's obvious evidence and characters that the people's demand are changing. In the past, in a stage, people have favorable interest in the annuity insurance product. At other times, some people prefer health insurance product. After the pandemic, people have diversified demand for insurance product. For NCI, the sales has show those trend. The annuity insurance has sound yield and performance, but the health insurance has encountered challenges. How to explore customers' demand and found a new growth point in this circumstances is a priority of our company. People's demand for critical illness products should be explored and attached importance. We have strengthened our research on the expanded product coverage and product research.
In terms of the sales, we try to guide the customers. Apart from our regular product innovation, we have introduced a new whole life insurance product, including [Non-English content] . We have promote research and development to new products, which are endowment insurance and whole life insurance, which might be introduced next year. Focusing on those changes, the product combinations and portfolios will be enriched, and to identify the customers' demand and improve the business. That whole life insurance is along, we have expected more values from those product. We hope that it will be recognized by the market and the firm, and contribute to the value growth. That's all.
Let's welcome the next question. Ladies and gentlemen, this is the Q&A session. If you want to raise questions please press star and one and wait for your name to be announced. Thank you
Thank you, management. Thanks for the opportunity. Zhou Jingjing from Changjiang Securities. Mr. Gong just talked about some product strategies. In the future, we know the pension contract system to account system
From the actuarial perspective, if we did see this switch, what products will NCI prepare since the unit-linked and universal right now, traditional whole life and annuity products, they are different. What adjustment? Question is about the agent. Actually, we are concerned about the turning point of the headcounts development. What is the bottom of this drop? We see some peer insurers also see some challenges. The agent headcounts has decreased about 40% for the whole industry. What is the end of this declining trend? What's your expectation? Thank you.
Answer the first question. You talked about the annuity and the pension products. This is a very big and a complex question. Also, this is an important aspect, how to cope with the aging population challenge and how to construct the third pillar. I like to share the social hot topics reflect a symmetry of information.
In the past, we see some information asymmetry, which may cause conflicts of interests and market pressures. Now the quick and convenient media coverage make information more transparent. This is also the same to the pension and annuity products. In the past, we mix the accumulation of money and also the withdrawal of money into one product. A customer at his 40s to pay his money to the insurance company, and by the end of 60, he may withdraw the money. Our past distinguished clearly between the account and the other annuity product types of products in NCI. Now, while the company is pushing up the to the right, we have see how much period of NCI, and encourages us to be more innovative and to improve our existing system.
Also, as you just mentioned, we have to leverage our advantage and capabilities in managing longevity risk and to deepen the reform of contract-type products. Second, for the account-type products, under the guidance of the third pillar, we have to set up a more flexible management model for the accumulation period and to generate more abilities to create values, to provide a much clearer and transparent display presentation to the customers. At the point, we will encourage customers to switch back to the contract-type product. I think this is the macro trend of pension and annuity products. NCI is a life insurance company. We have a complete and sound product system, and this year we also launched some new products. Some of them are short-term to medium-term, like Huijins heng Annuity. Also, we introduced the YiYang JinSheng and other products that was linked to elderly care communities.
For third-party accounts products, we will also follow the experience we accumulated under the third pillar structure and try to make some innovation. Thank you.
I'll answer the second question. You mentioned agent headcounts. When can we expect to see the lowest headcount? From nine million headcounts to over four million headcounts. What a dramatic drop for insurance industry. This trend will continue. A lot of unqualified agents leave this industry. Some of them are not suitable for the insurance selling. Many companies, including NCI, are taking active measures to recruit new agents. I can't say the specific time of this valley, but we think it's more important for us to retain those agents that are good at and excel at insurance sellings. Right now, the headcounts of agents is not enough for such a big population in China. I have several thoughts to share with you.
As I mentioned before, the first is to follow the rules and the laws. There used to be some misconduct in the agent team to acquire illegal interests and profits from the company. We have to strengthen the team management to abide by the laws and the rules, and to make sure all the data are transparent and are true. Second, we have launched products targeting at new recruits and existing agents. For new agents, we want to provide them with some products that is easy to sell and help them to engage with the customers. As Mr. Gong mentioned, we have some healthcare and elderly care communities that will help the new recruits to sell. The third is to build an agent team that is younger, more professional, and good at working at urban areas.
We wanted to simplify the hierarchical levels and the structure to meet the diversified needs of our customers. The last point is technological empowerment. We want to gain more customers from the internet. We have to expand the online channels and to cater to the needs of the younger customers. In the past, we used to think the recruitment of agents will bring, naturally, customers. It is not true. We have to expand the channels to help our team market and to increase their income so as to help them retain in the company. By doing so, we have to make efforts in two aspects. One is quality, the other is quantity. Thank you.
Due to time limits, let's welcome the last question. Next question comes from Shenwan Hongyuan.
Thank you for the opportunity. I'm Analyst from Shenwan Hongyuan, Gao Yuxiang. I have two questions. First, I want to ask about the industry. We can see the industry going down in the second quarter. What do you think are the reasons behind this, and when can we expect a turning point? What indicators or signs that may reflect the turning point? The second is, in the financial statement, we can see the payout of health insurance increased by over 40%, which is higher than the premium growth. Whether there are changes of assumptions behind this, and will adjust your assumption in the future? Thank you.
First, let's welcome Mr. Gong to answer the second question.
For the increase of the payout, we can see that the payment for medical insurance, because of the pandemic in 2020, a lot of the areas are restricted and the payment for medical insurance are low. In this year, the payout are returning to a normal level. That's the answer for your first question. About the payout for the critical illness product. In the past several years, the critical illness business increased fast, accounting for a high proportion of FYP in some time. We have a growing existing business. With the increase of our existing business, we can expect the growth of the payment to claims, and which is in line with the business growth in the past several years. We can expect the payout payment to the claims increase in the future.
For the current assumptions and increase of claim payments, whether there are some problems in terms of the pricing and the customers, I think it's a complex question. For the pricing point, the base for the pricing of our company has followed the critical illness table and occurrence rate table of the industry, and the morbidity rate. These tables are transparent. I think we have relatively certain and sound grasp of those risk centers. In the second point, customers' awareness of protection and insurance has increased, which promoted the customers to buy health insurance product. No doubt, we can see there are some fraud in these products sales, and which has increased the payment ratio of our company. The loss ratio as well. Recently, we can see many news which can show this phenomena.
Other is the increase of the medical technology, such as the thyroid cancer, which is not that critical, but has a higher claim payment. Generally speaking, I believe the claim payment is in the normal track and its increase is within our expectation. We will closely follow those assumptions and trends. Thank you.
Let's welcome Mr. Li Yuan to answer your first question.
About the first question, you've mentioned the growth of the industry in the second quarter. I have answered in my previous answers. I talked about this, the decrease of industry as mainly in the individual insurance channel, but the bancassurance channel and the group insurance has relatively good performance. For the life insurance business, I think there are four mismatches. This mechanism, the changes of the market and the mechanism all contribute and influence the industry development.
I think the distribution team-building models needs to be changed. For example, there is a mismatch between the age of customers and our agent. The second is the mismatch between the product supply and the customer's demand. Customers have diversified and personalized demand. The third is there's a mismatch between the sales model and the market customers purchase models. The young people likes to buy insurance products online. We are working on that. The last is mismatch between the people's income and the affordability of insurance product. There are mismatches. About the turning point, for me, I hope the turning point show as quickly as possible. For me, with the regulation requirement and the severe regulation policies, we can see there are some time that needs to adjust and adapt to the new regulatory requirements.
Then secondly, I think there needs time to transform the agent team. Companies needs to invest resources in this regard, and we have made selection and adjustment in the team building and business promotion. We have the similar feeling that we hope the turning point show quickly. Through the transformation and coordination of various resources, we believe we can expect some indicators to show the turning point. In this process, we should first of all, adapt to the regulatory requirement. The second is we need to strengthen the innovation. There are four mismatches just now mentioned, and we should work on that to solve those mismatches. This will require us to strengthen our efforts in product innovation, and we hope to empower the business with technology.
The second is we hope to build a new team, which is young professional urban team, and we hope to provide precise service and products to customers and to meet their demand. We hope these products we sold can better meet people's demand, including the demand for aged care and health care. At the same time, we hope to provide a better health care service for the customers, as well as aged care and health care service. Also we hope to provide more products and service in terms of wealth management business and aged care. Those businesses are our priorities, and we will closely follow the trend of those indicators. First is about the performance rate. The second is productivity per capita. In the first half, we can see the productivity per capita of our company has increased by double digit. The third indicator is people's income.
Now, the income of the agents is about RMB 3,000, which is not high and inadequate for agents' living. To improve and increase the income of agents will be our priority in the future. The fourth indicator is the recruitment. We have to decrease the falloff of existing agents and recruit high-quality agents, and recruit the high-performing agents. We hope to reduce the falloff of the new agents and retain the team. We hope those who are inappropriate for the industry leave, and hope those who can adjust the industry can retain. That's all for my answer. Thank you.
Thank you for participating our interim results announcement and for your questions. If you have further question, please contact the IR team of our company, and we are happy and ready to answer your questions. That's the end of the interim results announcement of NCI. Thank you.