Ladies and gentlemen, thank you for standing by for Fanhua’s Fourth Quarter and Fiscal Year 2016 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 is now being broadcasted live over the Internet. A 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 & 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 Qiu, Fanhua’s Investor Relations Officer.

Welcome to our fourth quarter and fiscal year 2016 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 this statement 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 are 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 Chief Executive Officer, Mr. Chunlin Wang; Chairman, Mr. Yinan Hu; and Chief Financial Officer, Mr. Peng Ge. Mr. Wang will walk you through our financial results in the fourth quarter and fiscal year 2016, and then the management and the Board Chairman will take your questions after the prepared remarks. Now, I will turn the call over to Mr. Wang.

[Interpreted] Good morning and welcome to joining us in our fourth quarter and fiscal year 2016 earnings result. I'll give you an update of our financial and operational results and Mr. Yinan Hu and Mr. Peng Ge and I will take questions at the end of the report. Firstly, I will give you an overview of our overall financial performance in the fourth quarter and fiscal year 2016. In 2016, the China’s insurance market records the highest growth rate in eight years with total insurance premiums growing by 27.5% year-on-year to RMB3.1 trillion. The P&C and life insurance sectors grew 9.1% and 36.5% respectively. 2016 was also a fruitful year for CNpad. Total insurance premiums generated by the company which RMB14.6 billion up 49.7% year-on-year and our net revenues were RMB4.7 billion up 66.2% year-on-year, which once again significantly beat our prior guidance. The exceptional results bear a solid testament to the successful execution of our growth strategy. One of the major highlights of the 2016 full year results was optimize business mix. Life insurance business as a percentage of total revenues improved from 11.3% in 2015 to 21.1% in 2016 as a result of a 209.6% year-on-year growth to RMB990.5 million in total net revenues divide from our life insurance segment. The results were attributable to both an explosive growth of 375.9% year-on-year in new policy sales to over RMB1.0 billion in 2016 and a 27.1% growth a renewal insurance premium to RMB928.5 million in 2016. Thirteen months persistency ratio improved significantly from 85.8% same period last year to 91.2% by the end of 2016, which is comparable to the average level of the top tier life insurance companies in China and the best among our peers in the insurance intermediary sector. The rapidly growing life insurance business has…

[Operator Instructions] Our first question today comes from the line of [indiscernible] from CICC. Please ask your question.

[Interpreted] The questions were from CICC and he has three questions. The first question is regarding the suspension of business cooperation between PICC P&C and Fanhua. Can the management give a little bit more explanation on that incident? And what’s the reason for the suspension of business cooperation? And is all the insurance intermediary that PICC has suspended to cooperation so far and do the company expects that the cooperation was all insurance company can make up that difference. And also what the impact on the company’s agency and claims adjustment business?

[Interpreted] It is at your quiet sudden notice and risk our subsidiaries were verbally notified by the local branches of PICC P&C in the afternoon of last Thursday. And so far, we haven’t received any form of written notification from PICC P&C. So we don’t know for sure the actual reasons behind the suspension of business cooperation. The only reason that we got was actually from the explanations provided by the local branches of PICC when they gave it a verbal notice that it was - it might be caused by some internal investigations, ongoing internal investigation in PICC P&C. And as for whether any other insurance intermediaries were also given the same notice of the suspension of the risk operation, we don't know over that. And we don't - we haven’t received any signs or received any notification from other insurance companies about their intention to start cooperation with us. So we are still conducting our normal business operations and continued business operations with other insurance companies as usual. And after the notification from - after receiving the notice from PICC P&C, we have responded quickly and we have validated impact and also make trends to direct the business, the previously divide from PICC P&C to other insurance companies and as well as strengthen our strategic cooperation with our exiting - with our other existing business partners. And so far, we have business cooperation with PICC P&C on three areas including the insurance brokerage business, the insurance agency business, which mainly include the auto insurance business and then thirdly the claims adjustment business. In terms of the insurance brokerage business, the disruption of business cooperation may have more direct impact on the revenues on our insurance agency sorry - on insurance brokerage business. And then for the claims adjustment…

Okay, thank you.

Thank you.

[Interpreted] Sorry, the second question is regarding our life insurance agency growth momentum going forward. As absorbed, there has been a job in the sales of our universal life insurance product while the growths on premiums for the more traditional life insurance products has been recorded a very strong growth. Do you see any increasing demands from life insurance under life insurance companies to sell more traditional long term protection type of products through Fanhua?

[Interpreted] Starting from the second half of last year, the CRIC has been a focused quite a lot, has been emphasized quite a lot about that about the fact that insurance industry should return to its basic function of offering protection to the society. So the CRIC issued some kind of restriction, some rules that restrict it of banking products. And they also have required the bank channels should sell more longer term health insurance products and traditional life insurance products. So we can see that the insurance company, the life insurance company that started to attach more importance to the sales of traditional life insurance products. And we also see more life insurance companies to oppose the company to for more in-depth cooperation for the sales of this type of products. And insurance companies are also more willing to invest more to know the sales of long term life insurance products and how the insurance products and that’s also one of the major reason that drive strong growth of growth insurance premiums. Thank you.

[Interpreted] The third question is regarding our dividends announcements. Actually the first time, the company announced - ever announced a dividend policies. Can the market expect, can expect a more regular dividend payment going forward and then therefore would like to make add a comment on your previous question?

[Interpreted] Well I’d like to answer your last question first. Well the management has been thinking quiet a lots about what’s the proper way to return to shareholders. And we have also noticed that our stock price haven’t been performing very strongly and so we are thinking what’s a better way to enhance shareholder returns. However, in the previous years, the company has been exploring out growth strategies. And as Mr. Wang mentioned just now, we haven’t seen a lot of certainties or visibility on our online strategies. So that’s why we’ve been very cautious to make any decision. However, after we reported the 2016 results, we the management feel more confident about growth prospect already. And also we feel more confident of our profitability outlook as far as our future cash flow outlook going forward. So that’s why the management proposed to the board that probably we should have a dividend policy to return to give better returns to our shareholders. And the proposal was well supported by the board in the board meetings, at the end of February. And this dividend announcement is not one-off thing, it’s going to be a regular dividend policy that we hope that we can continue to maintain an annual dividend payments going forward. Mr. Wang let add few comments on your second question regarding the growth of a life insurance business momentum.

And we the management has true confident that in 2017, the life insurance business will double in terms of service volume. And in that we also have confidence that our operating income will grow by over 50% in the next three years on a compound growth basis. Thank you.

Our next question today comes from the line of Ryan Robert from MCM. Please ask your question.

Good morning and thank you for taking my question. My question was actually on the margins for the year, I see that you reiterated the future guidance for operating profit is pretty strong for the full year. I was just curious if that reflects any increase in margin versus 2016 at the operating level?

[Interpreted] That’s right observation. And as we expect, life insurance business will increase in terms of percentage of our total revenues. The gross margin level will improve as we develop that. And secondly, we also expect the operating expense ratio will continue to go down - go forward and that will also help improve our overall margin. And we expect our gross margin will be maintained around 25% and net margin at 5% in 2017 as the average margins level for overall business.

Right, let me ask kind of a quick follow-up on that one, so in terms of the original thought process in terms of 2016 to increase the selling and marketing expenses, so I guess what changed and kind of going forward, how should we look at that expense line obviously ramped up significantly in 2016, but it sounds like that's going to come back quite a bit in 2017, I’m wondering if you can give us some color on that?

[Interpreted] We made a huge investment on marketing activities in 2016 and that's one of the major reasons for increase in selling expenses. And the investment in marketing expenses has helped driven the company's growth quite a lot, especially the strong growth from life insurance business at over 100% in 2016. So we can see that this marketing strategy has been quite status and we’re going to continue in this kind of investment, because it will become a record investment we will probably do it in a different way, and it will be become may increase commission payouts to promote the P&C sales goal to generate a more cross selling opportunity for our life insurance business. So there's a lot of cash - the gross margin on our P&C side may decline, but as we mentioned the life insurance business will increase in terms of percentage of our total revenues, it boosted the gross margins overall.

Gotcha, thank you, that's very helpful and congratulations on the solid end to the year.

Thanks.

[Operator Instructions] There are no further questions on the line today. I would not like to hand the conference back to management, please continue.

Thank you for joining us on today's conference call. If you have any further questions, please feel free to contact us. Thank you.