Thank you for standing by for Fanhua's third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent background noise. After the management's prepared remarks, there will be a question-and-answer session. Please follow the instructions given at that time if you would like to ask a question. For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within three hours after the conference is finished. Please visit Fanhua's IR website at ir.fanhuaholdings.com under the Events and Webcasts section. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Ms. Oasis Chu, Fanhua's Investor Relations Manager.
Good morning. Welcome to our third quarter 2022 earnings conference call. The earnings results were released earlier today and are available on our IR website, as well as on Newswire. Before we continue, please know that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause our actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but not limited to, those outlined in our filings with the SEC, including our registration statement on Form 20-F. We do not undertake any obligation to update this forward-looking information, except as required under applicable law. Joining us today are our Chairman and Chief Executive Officer, Mr. Yinan Hu, Chief Financial Officer, Mr.
Peng Ge, and Chief Operating Officer, Mr. Lichong Liu. Mr. Liu will provide a review of our financial and operation highlights in the third quarter of 2022. There will be a Q&A session after the prepared remarks. Now I will turn the call over to Mr. Liu.
[Foreign language]
Good morning and good evening. Thank you for joining today's conference call.
[Foreign language]
In the third quarter of 2022, challenges and opportunities coexist. On the one hand, with multiple factors such as the macroeconomic uncertainties, restrained consumption, resurgences of COVID-19 cases, and the regulatory requirements for nationwide double recording at play, the gross written premiums of China's life insurance industry merely recorded a low single-digit growth of 1.3% year-over-year, representing a sharp decline in the growth rate compared with the second quarter of 2022.
The decline in the number of insurance sales agents in the industry also continued, with substantial declines in sales force numbers reported by many large insurers. On the other hand, we are encouraged to see a steady growth momentum among insurance intermediaries as a whole, driven by significant growth in agent productivity despite an overall decline in sales force. In addition, more and more insurers are engaging intermediary channels and showing a more open attitude towards the mode of cooperation with independent insurance intermediaries, suggesting greater development opportunities awaiting intermediaries like us.
[Foreign language]
Despite challenging external environment, Fanhua showed resilience with steady business growth during the third quarter of 2022.
Our life insurance premiums grew by 6.2% year-over-year to RMB 2.8 billion, of which regular life insurance first year premiums reached RMB 529.7 million, up by 9.1% year-over-year. Even with the continued investments in technology and training, our operating income beat expectations to achieve RMB 32.2 million, representing a growth of 14.2% year-over-year.
[Foreign language]
The quality of our sales force continued to improve during the quarter, while total number of performing agents declined in accordance with our plan. The per capita productivity of performing agents grew by nearly 20% year-over-year. The contribution from high-performing agents increased even further, with the number of 100,000 premium agents growing by 46% year-over-year, contributing 48% of our total first year premiums in the quarter, up from 39% for the corresponding period in 2021.
[Foreign language]
Addressing the needs for high quality senior care, wealth management and inheritance solutions by Chinese mass affluent and high net worth families. Fanhua has continued our focus on magnifying our infrastructure platforms capability to empower agents to better serve clients.
[Foreign language]
Fanhua has implemented the insurance as a service model by pooling quality, trust and healthcare service resources in the market. On top of a wide spectrum of insurance products to match customers evolving needs throughout their life cycle and support agents to provide whole life services to their customers.
[Foreign language]
For trust services. As of the end of third quarter of 2022, Fanhua facilitated setting up nearly 150 trust accounts with over RMB 1.7 billion in trusted assets covering over 270 new insurance policies, contributing RMB 85 million of total insurance premiums. In the third quarter alone, Fanhua facilitated setting up nearly 60 trust accounts with RMB 510 million in trusted assets, contributing RMB 27 million insurance premiums.
[Foreign language]
For healthcare services in the third quarter of 2022, Fanhua continued to increase its efforts to expand healthcare service resources covering customers entire life journey, including introducing high quality life care service resources in the industry. We have also set up 14 healthcare service experience centers across the country to showcase the health management and elderly care community resources linked by Fanhua across the country to improve customer and experience and facilitate business conversion.
[Foreign language]
Leveraging on the trust and healthcare service resources and Fanhua's insurance policy custody technology, we've established a Triple F representing family office consultant, Fanhua retirement planner and family policy custodian training and certification system to help agents improve professional skills in a tiered approach. This is based on the Triple R, representing account responsibility, solution responsibility, and fulfillment responsibility, marketing model, and service scenario marketing. We also established a closed loop of services from training to customer engagement activities, service resource facilitation, solution design, and final transactions to support agents to engage with their customers and drive conversion more easily.
Up to now, Fanhua has carried out nearly 200 FOC and FRP training and certification programs nationwide, with a cumulative total of more than 13,000 certified trainees who have become the major force to assist customers in setting up trust accounts and selling whole life and annuity insurance products. In the third quarter of 2022, FOC and FRP certified trainees contributed about 66% of Fanhua's first-year life insurance premiums, and the per capita productivity was much higher than that of non-trainees. Building on the success of the FRP training programs in the third quarter, we have accelerated our training with an additional 3,000 trainees completing our training course in October.
[Foreign language]
By the end of the third quarter of 2022, Fanhua has largely finished the construction of its IT infrastructure to support digital operations. We continue rolling out various frontline digital tools for wider adoption among sales agents across the country and continuously optimizing the functionalities and user experience. Specifically, our Insurance Policy Custody System version 2.0 and Insurance Service Butler Workstation, our proprietary customer engagement platform, were both rolled out in larger scale during the third quarter. Currently, we operate a full suite of digital tools to provide all the support that agents need to manage their book of business online, from customer engagement, transactions, customer services, to personal professional growth, enabling significant efficiency improvements.
[Foreign language]
For the fourth quarter of 2022, in view of the ongoing resurgences of COVID-19 cases across the country, the growth prospect of Chinese insurance industry remains challenging. Against this backdrop, Fanhua will continue with our established development strategy in the fourth quarter to empower agents and create value for customers. The management expects our operating income to be no less than RMB 30 million in the fourth quarter of 2022.
[Foreign language]
This concludes my presentation. Now the floor will be open for your questions.
Thank you. As a reminder, to ask a question, you would need to press star one one on your telephone. If you have a question at this time, please press star one one. I show our first question comes from the line of Yu Yu Zhang from CICC. Please go ahead.
[Foreign language] Here I have three questions. The first one is, what's your current product mix, especially what's the proportion of your savings products?
In terms of the savings products, what type of insurers do you work with more often? What is the current take rate for such products? Secondly, could you share some more color on your profile of the customers and especially, what's the proportion of your high-end customers? The last question is about your sales force. Could you give us some more details on your strategy of the recruitment? Is it difficult to recruit high quality agents currently? Thanks.
[Foreign language]
Let me get back to your first question first. In the third quarter whole life insurance products, annuity and endowment such savings products accounted for 87.5% of our total first year premiums as compared to 83.6% in the same period last year. In terms of first year premium our major product suppliers are Sinatay, Great Wall, Aegon THTF, Aviva-COFCO and Huaxia, respectively accounting for 27.3%, 24.8%, 11%, 5.5% and 4.6% of our first year premiums respectively.
[Foreign language]
With the implementation of the C-ROSS Phase II. Many life insurance company are subject to greater restriction in terms of growing their business as the new accounting principles lower the recognition of life insurance policies, profits as core capital, which also resulting a lower solvency ratio, therefore subjecting them to greater growth pressures, capital pressure. This is also one of the reasons that, even though Sinatay remains to be our largest product suppliers, the shares in terms of our first year premiums has actually contracted from last quarter. As we also mentioned earlier, more and more insurance companies, has been engaging with insurance intermediate channels and adopted a more open attitude towards the cooperation with independent intermediaries. We expect that our product supply as well as our insurance company partners will become more diversified next year.
[Foreign language]
Based on 10 years APE Annualized Premium Equivalent first year commissions of the first year commission rate of savings products it's in the range of 90%-98%. In terms of 20 years APE of the first year commission rate for savings product can be as high as 138%-145%. Varying from one insurance company to another. However, savings insurance products the payment periods are generally much shorter typically three years, five years or ten years. So even though the first year commission rate is higher, but the renewal commissions are actually much lower than other type of products such as critical illness products. On the other hand, critical illness products has much longer payment periods, and the first year commissions rate is relatively lower than that of the savings products.
The total amount of our revenues generated from renewal commissions from critical illness products are actually much higher, which means that it has higher embedded value for the company. This is also what we were trying to improve by encouraging the sales of more longer term products as well as by partner with insurance companies to design new products with high embedded value to improve the overall the value creation.
[Foreign language]
As for the second question regarding our customer profile and the percentage of the mass affluent and high net worth customers. Currently, about 30% of our total customer groups are critical illness policyholders with per policy amount of approximately RMB 4,800. Of the critical illness policyholders, 66% are female, while 46% of them are in the age group of 30 to 40 years old, and with annual first year premiums amounting to approximately RMB 5,000. For the insurance policyholders for savings products such as whole life insurance and annuity insurance, the female accounted for 76% and over 60% of them are in the age group of 40 to 59 years old, with per policy premiums of RMB 48,000.
This means that the age group, in the range of 40 to 59 years old, this age group population are more willing to purchase whole life and annuity insurance for themselves and their family members to cater to their needs for both elderly care, legacy management as well as savings for our children education. This basically aligns with our current strategy to serve the mass affluent and high net worth customers.
[Foreign language]
Currently there are about 300 million high net worth individuals in China, with the age in between 40 to 60 years old.
[Foreign language]
In 2021, the insurance policyholders who paid over 100,000 first year premiums annually accounted for approximately 1% of our total insurance policyholders for the long-term life insurance products. However, this small percentage of customer groups actually contributed to over 30% of our total first year premiums. I believe that the numbers as well as the percentage of those higher net worth customers are actually increasing significantly on a year-over-year basis.
[Foreign language]
For 2022, we have shifted our agent recruitment focus towards an elite-based agent pool. We have increased the standards for agent recruitment. Compounding with the impact of COVID-19, we do see a slowdown of agent recruitment this year. However, we're encouraged to see that the contribution of the percentage of high-performing agents among new crews are actually increasing significantly. In the third quarter in particular, the percentage of the number of high-performing agents, which are defined as those who contributed 25,000 during the quarter in terms of first year premiums, actually increased from 26% in the same period last year to 43% this year.
The per capita productivity of our effective agents during the quarter also improved both year-on-year basis and on a quarter-over-quarter basis from 14,000 in the same period last year and 20,000 in the second quarter to 22,000 in the third quarter.
[Foreign language]
Building on our advantages in insurance trust services as well as healthcare services resources, as well as our the empowering capacity of our platform, and as well as leveraging on the trend of the rising demands among the mass affluents and high net worth individuals for healthcare and elderly care services, we will step up efforts to introduce more MDRT or Million Dollar Round Table members. Our target for this year is to increase the number of MDRT from 302 last year to 500 by the end of this year.
In addition, we also put a lot of focus to both recruit and to train our agents with more agents that can contribute over 100,000 premiums annually. Our target is to increase the number from roughly 1,600 to 2,000. That's representing a growth rate of 30% year-over-year. By the end of this quarter, by the end of the third quarter, solely based on the performance of nine months, in the first nine months of this year, there are already 300 agents reaching the standards of becoming MDRT, and about 1,200 agents has reached the standards of contributing 100,000 premiums, first year premiums, annually.
With the upcoming full quarter results with the contribution of their fourth quarter performance, we believe that there's still high chance for us to achieve this target. Thank you.
Thank you. As a reminder, if you have a question at this time, please press star one one on your telephone. I'm showing no further questions at this time. I'd like to turn the call back over to Ms. Oasis Chu for closing remarks.
Thank you, Jerome. If you have any further questions, please feel free to contact us. Thank you for joining on this today's conference call. Thank you. Bye.
Thank you. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.