Okay. Hello everybody, and welcome to Sidoti's May Microcap Conference. My name is Brendan McCarthy. I'm an analyst here with Sidoti, and I'm very pleased to welcome Huize Holding Limited. Joining us from the company will be CFO and Head of International, Mr. Ron Tam. Before I hand it over, a quick reminder that the Q&A tab is located at the bottom of your screen. Feel free to type in any questions throughout the presentation, and we can save time for Q&A at the end. With that said, I'll pass it over to Ron.
Great. Thank you so much, Brendan, and good morning, everyone in the U.S. It's Ron here from Huize. Very pleased to be back on this conference. It's our second time joining and hopefully today, I'll be speaking to some old friends here who's joining us again. More importantly, to introduce our equity story to new friends who are keen to know more about our business. You know, by way of background, we have been listed on the Nasdaq Global Market for six years now. We've been listed since 2020 and has been a rollercoaster ride over the past few years with all the geopolitical situation between the U.S. and China and, you know, obviously regulatory changes in domestic market.
I think today we have something very exciting to share with the audience, given how much we have traveled through this journey and to be where we are right now. A very quick word on myself, just for those who have not met me before. I'm Ron, I'm previously investment banking professional with Goldman Sachs in my initial career. I've been involved with the Chinese fintech sector for the past 13 years. Huize is my latest, you know, CFO appointment. Since 2020, I've been involved with the company for six years. My title also includes Head of International, which means that I'm also driving the international business development for the group since 2023.
The rest of the team members are listed here for your information. We have combining, you know, over 100 years of experience from both domestic Chinese leading institutions and also international financial institutions as well. A one-liner on what we are and who we are. We are Asia's leading insurance technology platform. We integrate consumers, carriers, and distribution partners through a fully digital AI-driven ecosystem to deliver seamless lifelong insurance experiences. You know, I will further, you know, elaborate on what that means in the later slides. You know, in terms of our business model, essentially, we're a three-sided marketplace involving three key constituents here. We are not just a simply an insurance broker in the simple sense. We are more of a platform, and that distinction matters enormously for evaluation purposes.
We connect three parties simultaneously. obviously, one of the most important parties is the insurance carriers that we help distribute insurance to the marketplace. in the current moment, we have over 150 live insurance partners that's connected through API to our platform. these are the insurance companies that need digital distribution without the need of building it themselves. we're basically solving that digital distribution problem for them. In the middle, you can see that we have a ton of ecosystem partners. these are partners that provide us with leads for insurance monetization. these are commonly the e-commerce merchants that, you know, e-commerce platforms in China.
We have a very vibrant community of influencers or KOLs that are able to bring in leads for us, and also, more importantly, and increasingly importantly in the marketplace, independent financial advisors or IFAs who need a compliant and technology-enabled insurance monetization platform to do business. Thirdly, the end market, the end consumers. To date, we have accumulated over 12 million consumers who want simple, personalized digital-first insurance experiences. These are the three key constituents that we serve on the marketplace. A very quick sharing on the scale of our platform. Here are some key metrics here to show.
Again, we have over 12 million consumers who have bought a policy from our platform, so that's a pretty sizable, you know, consumer or customer base that we have, that obviously lead to a lot of interesting, you know, AI deployment that we could do with the transaction data that we have accumulated over the years. In the middle, you can see that we have recorded a significant premium distribution scale. In the year of 2025 alone, which is last fiscal year, we have distributed over $1 billion of policies, that ranks us in the top, you know, five distributors in the China market. Again, we have an extensive partnership network.
We have over 150 insurance carriers that are connected to our platform and 10,000 distributors, yeah, who is working with us in the ecosystem. Currently, AI is the topic of the day. In the later slide, we will show you more about how we're doing AI in terms of deploying that in our business model and the concrete, you know, results that it's showing through. It's very exciting to share some details there. Also internationally, we are growing significantly since 2023. I also wear the hat of the CEO for Poni Insurtech, which is our, you know, overseas brand. We're proud to say that we have set a target in 2024 for 30% of our group revenue is coming from the international market.
We have already reached almost the 50% mark for the fiscal year 2025. We have also secured licenses in Singapore. In the later slide, I'm going to go through more on the international perspectives. We operate across three key channels for distribution. Here you can see some visualization of what that means. On the first part is the direct-to-consumer concept through our own digital and social presence on the Internet, on digital channels. For the U.S. users, this will be your TikTok. Other parts of the world, this will be your Instagram, your Facebook. In China, this will be the equivalent platforms like Xiaohongshu, which is now very familiar in the U.S. marketplace as well, which is the Instagram equivalent.
Essentially, we reach consumers through content-driven marketing efforts, to which the eyeballs to consumer education, to raise awareness for insurance. In the middle, we work with, you know, again, 10,000 ecosystem partners. This could be influencers, this could be merchants, this could be financial institutions or agencies who do not have the insurance license or products which require our platform to help monetize. On the right-hand side, we are also a very major platform for independent financial advisors in China and increasingly in Southeast Asia. We basically are an open architecture whereby our, you know, product and services platform can be opened up to third-party IFAs to utilize, and therefore, this will be a turnkey solution for, you know, digital insurance product distribution for the IFA network.
Going to the next slide, a word about our customer base. In financial services, customer quality determines unit economics and we would like to say that ours are relatively high quality. You know, our 12 million strong policyholders have an average age of 35 years old. These people are at the prime earning age and insurance purchasing years. 65% are from higher tier cities of China, so that means the top 20 GDP cities of China. These are the mass affluent segment with both the need and ability to purchase multiple policies for themselves and for the family.
If you are familiar with the insurance industry, you would note that we have a very high persistency ratio of over 95%, which means that customers who buy the long-term policies keep paying the premiums. That means a lot for the insurance companies that we partner with. You know, the LTV playbook is also very clear and executing strongly. You know, first policy buyers primarily in critical illness and life insurance. Second policy repurchase rate is, you know, at the tune of 36% in the most recent year. You know, we cross-sell into health, children's, seniors, comprehensive family, education, annuity, and the likes.
The cross-selling and upselling LTV, you know, you know, equation is already pretty much proved itself, given our high-quality customer base, young, you know, dynamic and in the mass affluent years of, you know, earnings. So on the AI models that we have, I think when we talk about AI these days, we look back with some concrete numbers, not just concept .I think that over the last three years, we have been investing quite heavily in building up our AI, you know, capabilities. You know, we're spending, you know, close to $10 million per year just on CapEx. I think we are happy to say that we are now practicing what we preach for the past few years.
You know, really thanks to the digital-first, you know, platform operations that we have from day one, we have accumulated a massive treasure trove of proprietary data from our platform operations, you know, over the last 19 years. Now that is translating into AI-empowered, you know, mobile app, which is driving a 50% year-over-year growth on self-directed long-term policy purchases. There is also, you know, 15,000 users being served daily through our AI-enabled advisory. Without any human interaction, the AI is, you know, empowering consumers to choose the right products for themselves. On a customer service end, we are achieving a 95% accuracy ratio on responses to inquiries.
We're also using AI to facilitate claims, which is the most important pain point to solve for the customer at large. Our customer feedback has been telling me that the AI empowered claims assistance is extremely valuable to our customers. With a quick word on the market opportunity, I think the U.S. audience may not appreciate actually in China, although we are now number two economy in the world, we are still very under penetrated into the insurance. You know, in the U.S., we talk about $3,024 of coverage per capita. In China, that's $388 only.
That's a factor of eight difference between the U.S. and China, which is representing the single largest protection shortfall in financial services in the world on top of 1.4 billion people in a rapidly expanding middle class. That gap is really our market opportunity, and we are the infrastructure layer to close it. You know, 20 years ago, traditional insurance in China is sold through agency, you know, traditional agency. It's very expensive. That has changed rapidly in the recent years, you know, with rapid adoption of digital insurance distribution. On the left-hand side, you can see that the digital penetration expected to reach 35.7% by 2028, you know, representing RMB 2 trillion market.
The key buyers nowadays are the post-90s millennials, and the trend in digital adoption is just gonna accelerate further and further. On the right-hand side, that's also a very interesting fact to note that the channel mix in China is still predominantly, you know, through tied agents. That's changing in recent years. If we take note of what Hong Kong is experiencing or the U.S., we talk about at least 35%-50% of distribution being handled by independent agents and brokers. We are seeing that both the pie of the industry and also the share of the pie will be increasing over the next five to 10 years, which will strongly support and underpin a double-digit CAGR in new business premiums by digital platforms like ourselves.
Now we're getting to the international expansion. Again, very proud to be heading this effort for the group. The international business is no longer a pilot. It's a second engine of growth operating at scale. Again, the brand name is called Poni Insurtech. Just for the benefit of Western speakers, we do not use a Chinese name. Poni is established in 2024. We're headquartered in Singapore, obviously for geopolitical diversification and center for international operations. We are operating a dual hub approach. Again, we targeted 30% international revenue two years ago, we almost breaking 50% last year. We are executing. We are, you know, we are checking our progress, and I think we are delivering.
Particularly in Hong Kong, revenue growth has grown almost 3x in 2025, contributing 48% of total revenue overseas. That's quite remarkable and significant given that we only started our Hong Kong business in 2023. That's really underpinned by the tailwinds from the mass affluent cross-border wealth allocation from the mainland Chinese market, and we are building the digital infrastructure to facilitate that. Excitingly, in the last year, we also secured a Singapore license to conduct our insurance business. We are building a dedicated high-net worth proposition serving cross-border wealth management in Singapore, you know, protection, accumulation, and legacy planning. Singapore is our platform for pan-Asian institutional-grade distribution.
In Vietnam, very exciting, you know, a growth market, through our Poni brand and our acquisition of Global Care, you know, in the market, which is a leading insurtech play in the market. We have delivered over 100% growth in gross written premiums, you know, 84% revenue growth in 2025. We have quadrupled our users in 2025 for our local mobile apps. Very exciting developments in Vietnam, although it's still at a relatively small base in an absolute scale. That would change. You know, that's a long-term play for us. Again, we are replicating a proven playbook from China into markets that are, you know, five to 10 years behind China on digitization. It's very exciting growth, you know, trajectory expected towards 2030.
We're looking at a CAGR of almost 30% for the market. Financially, we also delivering on four key metrics here. I'm not going to just read off the slide. I guess the audience can read on your own. I guess the most important thing is, you know, premium growth has been very strong, especially in first-year premiums. That's reflecting new business momentum. This is a key growth driver. Revenue has grown also significantly in 2025, particularly the international revenue contributions. I think that is very important for our U.S. investor base to de-risk our geographical concentration in just a pure play China play into a pan-Asian play.
Profitability also has been, you know, we have been robustly delivering to the shareholders, you know, RMB 22.6 million for the last fiscal year, significantly improving expense to revenue ratio of 6% and with AI and all the efficiencies that's driving that. We are expecting margin improvements going ahead because of AI deployment, you know, in the works. Just to wrap up on the investor highlights, you know, there are eight key points here, you know, to crystallize into, you know, takeaways. You know, we are a leading insurtech platform that connects the full industry chain from carriers to partners to consumers.
We already deploy AI, and that's driving efficiency with proprietary data set that we have gained over 19 years of operating history. We have a very sizable policyholder or customer base, you know, 12 million strong. These are young, mass affluent, high LTV potential. We have been customizing products with leading international providers. That speaks to the, you know, the quality of our business model and the sustainability of our business model. We have high, you know, customer, you know, service, you know, points or satisfaction rates. We have a very expansive market opportunity just in China alone and also rapidly digitizing pan-Asian markets. Sustainable pro-profitability. You know, we have a very cash-rich balance sheet, which I'm going to go into the details on the next slide.
You know, compared to our market cap of only less than $20 million US dollars right now, we have over $35 million US dollar of cash on the balance sheet. You know, the valuation dislocation is extremely, I would say, attractive to new investors at this point. You know, again, we are a profitable business. We're not burning cash and at a price-to-book metric, we are just 0.3 times price to book. Again, that's a huge valuation disconnect between the market value and also the fundamentals of the business. For management and insiders, we own around 34% of the company, we have significant interest in the business.
I guess, we are actively engaging with the U.S. market, given how I think, it's also very timely that the Trump-Xi visit was from last week. We do see that the, you know, the inter, you know, country relationships warming up. That should do, you know, do good for Chinese companies that lives on the Nasdaq market with good fundamentals. You know, key takeaways on the valuation side and on the investment opportunity, I think that will be a catalyst for rerating to peer multiples. I think, you know, at least at a one-time book, we are seeing 3x, you know, valuation uplifts from current levels. The international business is scaling well. We are delivering on the international expansion.
With that international revenue diversification should also help re-rate our company from a pure China sort of discount to a pan-Asian premium. With that, I'm just gonna close our presentation and, you know, I'm very happy to take any questions from the audience. Thank you so much.
Great. Thank you, Ron, for the overview. We can now open the floor for Q&A here. We have a couple questions from our attendees. Can you discuss your insurance partners, are these relationships primarily distribution or are there product co-creation involved there?
Great. Great question. Thank you. Yes. You know, we have a very sizable business partnership with leading insurers in both China and increasingly in the international market for co-created products. I think some of the insurance companies that are operating in China, particularly the foreign Sino joint ventures, so these would be the likes of the Aviva or the Generali's of the world. You know, these players, they value a lot on our insights on the marketplace because we are the frontline distribution that's facing the consumers every day with our consultants, with our agents, and advisors. We are able to feed back very precious, you know, market data, market intel, consumer preferences to help the insurance companies to design products that suits the marketplace.
In that way, we are increasingly getting engaged with the insurance carriers to co-develop products that, you know, with a very high confidence level that it will be well received by the digital platforms. That's a very, you know, important point to note as well. On this slide, you can also see some numbers that will back the statements. 88% of our portion of that is coming from our customized products from these co-developed products with the insurers.
That's great. Ron, I believe you mentioned, you know, typical persistency ratios in the mid to high 90% range. It's obviously very strong. Has that, your ratio always trended around that level? How does that compare to some of your peers?
Right. Yeah, I mean, I think our persistency metrics have been very, very stable for the past six years of our disclosure history. We have been disclosing this metric pretty much every quarter. You can see that, you know, it has been at least at the 90s level. In the industry at large, I think we are top quartile for sure. The reason for that is really by way of our distribution franchise, we are able to reach the younger cohorts in the market. With these younger cohorts buying long-term policies, these are mass affluent white collar workers in the top 20 GDP cities of the country. All these factors play into the high persistency ratios.
So the quality of business is robust, and that's also the reason why leading insurers decide to work with us on customized products offerings to the marketplace. We just disclosed our Q1 result, actually, operating metrics this morning before market open. So again, in the first quarter of 2026, our persistency ratios are at least 97%. So pretty much at par to what we had last year.
That's great. In those Q1 results, you know, I think I noticed the first-year premiums, you know, had very strong growth.
Yeah.
It looks like the renewal premium growth was lagging that first-year growth a little bit. Can you kind of bridge that a little bit between what you've what you mentioned on the persistency side and what you're seeing on the renewal premium growth side?
Sure. The premium numbers, I think the audience needs to understand, some products, they have a very long-term life cycle. For example, some of the critical illness products, they go for 10 years of payment, right? For most of the savings products that we are distributing in the recent two, three years, be it in the China market or the Hong Kong market, these are typically single premium policies. A large portion of that will be single premium policies, therefore, they just pay for the first year. The renewal, there's no renewal premium on those, right? Because it's single premium. Therefore, you need to look at the persistency metrics to be more relevant as to the quality of the business.
The renewal premium number will be affected by the product mix in the most recent years. The key growth driver for revenue actually is FYP or first-year premiums because we get the bulk of the commissions in the first year. FYP carries a much higher commission take rate than renewal premiums. Again, in the Q1 of 2026, we just published the numbers there. We have a 52% year-on-year growth on first year premium. It's a very, very strong number. We do see signs of, you know, the economy picking up again in China. Again, thanks to the tailwind of wealth, you know, allocation to the offshore markets from the mainland Chinese, Hong Kong is seeing still very strong momentum.
Now we're also in Singapore with a Singapore franchise. We are able to capture some of the more high net worth customers that will be moving the capital to Singapore. In Vietnam, you know, that's also a very high growth, albeit from a low base.
Got it. That makes a lot of sense. Let's turn to the international side of the business.
Yeah.
I think you mentioned international revenue was currently trending above your 30% target of total revenue.
Yes.
What's the outlook for that kind of revenue mix going forward?
Yes. We have actually reached 48% in 2025 on this slide. We see that this number will be stabilizing a little bit at this level because there has been a relatively high growth in the last one to two years for the Hong Kong market versus a somewhat lukewarm market environment in China, as we all know, given the macro challenges there. Again, because macro China, or macro picture in China is warming up, we do believe that China market is expected to see some good growth this year.
While Hong Kong continues to grow with a strong momentum, and additionally with Singapore and Vietnam, we see, you know, international revenue to be relatively at this level, because of those, you know, strong growth prospects from both domestic, international markets this year.
Got it. Maybe talk about the margin profile of the international business, the commission margin, you know, maybe versus or in Mainland China versus some of the international areas where you're doing business.
The international segment is indeed carries a relatively lower margin versus the China market business. That has to do with the way that we distribute with partnerships. Mostly this will be the IFA partners that will be selling, you know, these, you know, offshore products, you know, in the ecosystem. Of course, we also have our organic customer base from our platform that will be purchasing these offshore products. The blended margin on the international segment is relatively lower than the Chinese segment. Margin-wise, we do expect, you know, a relatively stable margin profile on a gross level.
On the operating and net levels, we do see potential for operating leverage to manifest itself, given how we are deploying AI in the business. You know, increasingly, that would mean either, you know, cost savings if should we choose to pursue, right, i.e., headcount reduction. Or, with the same amount of headcount we can produce, you know, 5x, 10x more business. Either way, we'll be achieving operating leverage. We do see margin profile at the net basis to be improving in the next three to five years, given how we are already heavily invested and seeing results from the AI deployments.
That's great. On the CapEx side, I think you mentioned the bulk of CapEx has been deployed towards AI development. Can you go into a little bit more detail on any success that you're seeing on the development side and maybe how you see that figure trending through the remainder of the year?
Yeah. On this slide, we have quite a lot of details on the AI, you know, capabilities and results. I guess we running a little bit out of time. I think this deck will be uploaded on our website. You know, the audience can feel free to go and search for it. In a nutshell, three key things. We increasingly using AI to automate customer acquisition. That in itself is very, you know, powerful, right? Acquiring customers just using AI and AI chatbots being the main interface between our mobile app and all the social platform presence with the customers, right? That's number one. Again, that's on the revenue generating side.
On the OpEx savings side, you have, you know, the claims being processed by AI, so we do not need people to process that, or at most as many people to process that. On the underwriting efficiency, that's also something that we can empower the insurance companies. I didn't get into details there on this call because of the limited time. You know, risk management on behalf of on insurance companies, delivered through our AI-empowered underwriting engine has been very powerful as well. That would mean significant operating cost savings, and that will be passing through the ecosystem and therefore which that would also translate into margin improvement on the operating level.
All in all, you know, AI is deployed front, you know, back, and center throughout the value chain, and we're just at the beginning of it.
That's great. Well, well, Ron, we really appreciate the detail. I have about a minute left here. I will pass it back over to you for any closing remarks.
Well, thanks, Brendan, you know, I appreciate the audience for joining today. I'm very excited to engage with the U.S. investors, you know, after a very challenging few years. You know, we'll continue to reach out to the market. We do see a very strong re-rating catalyst coming in the next 12 months for the stock. You know, we also want to close by saying that we do have plans for a dividend payment distribution provided we meet certain public, you know, targets this year. We would be able to, you know, also return capital to shareholders directly through a cash dividend.
That's something that's in the works. We do hope to achieve the targets that we set for ourselves.
Fantastic. Thank you, Ron. Thanks everybody for joining us.
Thank you.
Take care.