Thank you for standing by for Fanhua's First Quarter and First Half twenty twenty one Earnings Conference Call. There will be a question and answer session. Please follow the instructions given at that time if you would like to ask a question. 3 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 like to turn the meeting over to your host for today's conference, Ms. Oasis Qiu, Fanhua's Investor Relations Manager.
Good morning and good evening. Welcome to our 2nd quarter and first half 2021 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 note 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 the applicable law. Joining us today are our Chief Executive Officer and Chairman of the Board, Mr.
Chunlin Wang Chief Financial Officer, Mr. Peng Ge and Board Secretary, Lily Li. Mr. Wang will provide a review of our financial and operational highlights in the Q2 and first half twenty twenty one. There will be a Q and A session after the prepared remarks.
Now I will turn the call over to Mr. Wang. Good morning and good evening. Thank you for participating in today's conference call. On the first part, I will talk about our views on the market trends.
Firstly, the resurgence of COVID-nineteen have brought a far reaching impact on China's economy and business activities, directly or indirectly hurting consumer contents and purchasing power of the middle class families. Many industries have been drastically impacted and the insurance industry was certainly not immune. Even so, we are firm believers that challenges and opportunities coexist. We still believe that there is tremendous room waiting to be explored in China's life insurance market in the long run and that professional insurance intermediaries as an important insurance distribution force still enjoy huge growth potential. The progress made in the past in the professional insurance intermediary industry was only to lay the foundation for future development and COVID-nineteen is expected to speed up the development of the industry.
It is inevitable and irreversible that the market share of professional insurance intermediaries will continue to increase. Thirdly, health insurance market is getting saturated and growth is expected to slow down in the next stage. However, with an aging population, the demand of Chinese middle class families for commercial pension insurance and long term annuity is expected to continue to grow and thus opens up a huge blue ocean market. The key to cultivating and meeting such demand is to build a high quality sales force, gain customer insight through digital intelligence and provide customers with a variety of customized products according to their individual needs, thus prolonging customer lifecycle. Fourthly, we firmly believe our strategy of professionalization, digitalization and open platform will prepare us well to seize the new opportunities emerging from the market changes.
Hence, we will stay committed to pushing forward our strategy. On the second part, I will give a review of our financial results in the Q2 and first half twenty twenty one. Life Insurance Industry witnessed a sharp decline in total gross written premiums by 16.6% in the Q2 of 2021. Against the industry headwind, Fanhua managed to record RMB2.5 billion worth of total life insurance, GWP, representing a positive growth of 4.9% year over year with operating income reaching RMB51 1,000,000 higher than expectation in the Q2 of 2021. As compared to only 0.4% year over year growth in total life insurance GWP in the industry in the first half of twenty twenty one, Fanhua registered RMB5.5 billion in life insurance premiums, up by 16.9 percent year over year and RMB191.4 million in operating income, meeting nearly 2 third of our target for 2021.
And the 3rd part would share the progress that we've made in our strategy of professionalization, digitalization and open platform strategy and we have made encouraging progress. Firstly, in terms of professionalization, we have approved the establishment of 14 Yintong branches, among which 9 are in the preparatory stage for opening. Over 100 Yintong advisers have been recruited up to multiple rounds of vigorous checks and assessments. Secondly, in terms of digitalization, we rolled out 3 major digital tools in the Q2 of 2021, I. E, digital asset management platform, Roan's digital operating platform and Roan's Guanjia.
The key value of using this digital tool is in helping team leaders with managing teams more efficiently and in empowering agents to better engage clients based on data driven insights and We applied new digital tools in Hebei province on a pilot basis since May with about 8,000 agents installing our WICOM and over 2,000 registering as digital asset originators and connecting to more than 40,000 clients through WICOM. This digital ties tools and operation have significantly helped mobilize our existing sales force and connected clients, laying a solid foundation for further team management and client operation. Building on our experience in the Harbin pilot zone, we plan to roll out digital tools among our frontline sales force on a wider basis and implementing a new development model to expand our entrepreneurial sales teams, but by digital empowerment, I. E, is to digitalize offline operation to recon based online chat group operation, so as to assist our team leaders to manage their team activities more efficiently and professionally, while empower our agents to better engage with their clients in a professional manner. The first part is about our business outlook for the 3rd quarter and the second half
of 2021.
We expect our new business for the Q3 of 2021 to grow on a quarter over quarter basis, while operating income expected to be no less than RMB25 1,000,000 with increased spending on implementing our Yintong plant and promotion of digitalization initiatives. In the meantime, we will spare no efforts to ramp up sales in the last quarter to achieve our full year sales target and gear it up for the Jumpstart sales campaign for 2022. Operating income is expected to exceed RMB100 1,000,000 for 20 21. Fifthly, our dividend plan for the Q2 of 2021. Our quarterly dividend for the Q2 of 2021 is US0.15 dollars per ADS.
The dividend is payable on or around September 23, 20 21 to shareholders of record on September 7, 2021. Thank you. Now the floor will open for your questions.
Your first question comes from the line of Alan Sung from Morgan Stanley. Please ask your question.
Good morning, management. I just have two quick questions. First, what is the impact of the so called double recording practice on offline insurance sales? And secondly, could you just quickly comment on the sales new sales trend of critical illness products as well as savings type products in the since the Q3 of this year? Thank you.
Firstly, from Fanhua's perspective, we welcome this new regulations. We believe that it will help to regularize to standardize the operation in the industry and help to reduce malicious policy cancellation and reduce sales misrepresentation? And then secondly, short term wise, there may be some adverse impact, but from long term perspective, we believe that the benefits will be much larger than the adverse impact. And thirdly, this regulation will also post higher requirements for professional insurance intermediaries to standardize their operations and it will help to improve the quality of the professional insurance intermediary sectors as a whole. We believe that this double recording requirement is a positive for those companies who have already more standardized operations and have this strong capability.
In the past as life insurance sales organizations are mostly organized in the payment structure and a lot of the sales agents are actually working as a sales agent on a part time basis. So not a lot of them have strong abilities in the sales skills. So critical illness, which is relatively easy to sales, became the major product for professional insurance in the Middle East. However, and as a result, the penetration rate of critical earnings products has been quite high in China. So therefore, we expect that the room for further development for our CRISPR new products will be quite limited.
And we believe that the broader market will come from the demand from the 400,000,000 middle class families or diversified family asset allocation solution. And such demand opens up a new blue ocean market, but such demand will also require the services of more professional sales agents and which who will be able to offer customized products for the clients based on the individual needs. So therefore, our future market proposition and or our major focus will be to meet the demands of this 400,000,000 middle class for family asset allocation plans. Therefore, we are going to actively pursue customer innovation and customer customization product customization, so as to make sure that in the future, this customized products will account for a majority of our sales. On August 26, we're going to host a new product launch conference or a customized product, a whole life insurance product, which is Core Body 1.
And this product will be officially launched to the market in September and which will be our major product in September. We already established cooperation agreements with 6 reinsurance companies. So in the future, we will work with both reinsurance companies and insurance companies to customize and design products for our customers.
Thank
you.
Your next question comes from the line Zixin Wang. Please ask your question.
The first one is about the product mix. What is our current product mix, say, the proportion of annuity, critical illness and life insurance? And is there any change compared with the previous year? And next question is about the regional strategy. Which provinces or cities are our main target?
And which group of people are our target customers? Thanks.
By 20 year APE, whole life insurance, critical illness and annuity represented 49%, 43% and 6% respectively compared to 19%, 69% and 9% respectively in the same period last year. And by 1st year premiums, whole life insurance, critical illness and annuity represented 69%, 20% and 7% respectively as compared to 31%, 45% and 14%. Our Critical earnings product as a percentage of our total mix dropped quite significantly. I believe that there was 2 major factors. Firstly, in the Q1, there is the transition between the new critical illness definition to with the O1.
And after the transition, we believe that the critical illness products are not as good as the O1. And so therefore, the demand for critical owners has weakened after transaction. And then secondly, I believe there is already a market consensus that CRISPR units product has reached a significant high level. So the major market of full future will be the savings products. So believe that critical illness growth will slow down while savings products will continue to grow.
But of course, it will also take time for the savings product to achieve explosive growth.
There are no further questions at this time. I would like to hand the conference back to today's presenters. Please continue.
Hi, operator. We haven't covered the second question yet. Hold on.
Okay, sure.
Most of the 400,000,000 middle class families live in urban areas. Therefore, our strategy has always been urbanization and elite sales force focused. And as we mentioned, we're going to implement our digitalization and professionalization strategies. And the major market for us to implement this strategy will be the major cities. We have 2 strategic priorities.
Firstly, is the development of entrepreneurial sales teams, but by digital empowerment. We hope that we can attract more and more elite sales agents to join our sales force. And secondly, the second priority is our Yintong plans. As we mentioned just now, we have approved 14 Yintong branches and we expect to have 25 Yintong branches by the end of this These Yuntong branches will be mainly located in 1st tier cities, including Shanghai, Beijing and Guangzhou, Shenzhen, as well as provincial capital cities. So far, we have made good progress.
Thank you.
Yes. There are no further questions at
call. If you have any further questions, please feel free to contact us. Thank you. Hello, you can conclude this call.
Yes. This concludes today's conference call. Thank you for participating. You may now disconnect.