GlobeNewswire Inc | Nov 23, 2021 04:33PM EST

November 23, 2021

GUANGZHOU, China, Nov. 23, 2021 (GLOBE NEWSWIRE) -- Fanhua Inc., (Nasdaq: FANH), (the Company or Fanhua), a leading independent financial services provider in China, today announced its unaudited financial results for the third quarter ended September 30, 20211.

Financial Highlights for the Third Quarter of 2021:

(In thousands, except per ADS) 2020Q3 2021Q3 2021Q3 Change (RMB) (RMB) (US$) %Total net revenues 812,003 683,537 106,083 (15.8 )Operating income 73,326 28,163 4,371 (61.6 )Net income attributable to the Company?s 75,322 34,250 5,316 (54.5 )shareholdersDiluted net income per ADS 1.40 0.64 0.10 (54.3 )Cash, cash equivalents and short- terminvestments (As of September 30, 2020 and 1,700,472 1,397,727 216,923 (17.8 )2021)

Commenting on the financial results of third quarter of 2021, Mr. Chunlin Wang, chairman and chief executive officer of Fanhua, stated, China's life insurance industry continues to be under pressure in 2021, as consumer confidence has not yet fully recovered from concerns over macroeconomic uncertainties, especially for products such as life insurance that are not considered to be imminently-needed. Total gross written premiums (GWP) in the life insurance industry fell by 1.9% year-over-year in the third quarter of 2021.

Fanhua's overall performance in the third quarter of 2021 was in line with our expectations: total GWP hit RMB2.7 billion, representing a year-over-year increase of 8.9%, outperforming the industry. New policy sales reached RMB567.0 million, growing by 11.2% quarter-over-quarter. Operating income achieved RMB28.2 million, surpassing previous guidance.

We are happy that we made good progress in executing Fanhuas Professionalization, Digitalization and Open Platform strategy in the third quarter of 2021, among which, we completed the target of building 10,000 digital entrepreneurial teams well ahead of schedule. We are currently focused on operating WeCom-based chat groups of these digital entrepreneurial teams to drive conversion.

Meanwhile, Fanhua is actively advancing product customization and has made remarkable achievements. Since the beginning of this year, Fanhua, together with insurers and reinsurers, has co-launched 9 customized products, ranging from whole life, annuity, critical illness and term life insurance to million-yuan medical insurance. In the third quarter of 2021, customized products contributed over 30% to our total new policy sales.

Looking forward to the fourth quarter of 2021, we see both challenges and opportunities. The Notice on Further Regulating the Internet Life Insurance Business of Insurance Institutions (referred to as the New Regulation) issued by China Banking and Insurance Regulatory Commission on October 22, 2021 has become a trending topic in the industry. The rationale behind the New Regulation is to refocus on offline insurance distribution, particularly for longer term high-value products. Insurers and brokers with extensive offline sales network coverage will significantly benefit from the New Regulation and usher in broader development opportunities over the long run.

We believe that our Professionalization, Digitalization and Open Platform strategy and our positioning of catering to the needs of 400 million middle-class families for family asset-allocation services well align with market trends and we are on the right track to fully capitalizing on the market opportunities.

In the fourth quarter of 2021, Fanhua remains focused on the execution of our growth strategy, and get well prepared for the Jumpstart Sales Campaign 2022 to achieve our full year target for 2021 while winning a good start for 2022. Operating income is expected to reach approximately RMB80 million for the fourth quarter of 2021.

Financial Results for the Third Quarter of 2021

Total net revenues were RMB683.5 million (US$106.1 million) for the third quarter of 2021, representing a decrease of 15.8% from RMB812.0 million for the corresponding period in 2020.

-- Net revenues for agency business were RMB562.1 million (US$87.2 million) for the third quarter of 2021, representing a decrease of 18.7% from RMB691.6 million for the corresponding period in 2020. In the third quarter of 2021, total GWP increased by 8.9% year-over-year to RMB2.7 billion, of which first year premiums decreased by 14.2% year-over-year and increased by 11.2% quarter-over-quarter to RMB567.0 million while renewal premiums grew by 17.2% year-over-year to RMB2,140.9 million. Net revenues for the life insurance business were RMB525.2 million (US$81.5 million) for the third quarter of 2021, representing a decrease of 19.5% from RMB652.4 million for the corresponding period in 2020. The decrease was mainly due to the continued adverse impact on demand for critical illness insurance after the strong sales prior to the transition to the new critical illness definition framework in the first quarter of 2021. In the third quarter of 2021, total life insurance GWP increased by 9.0% year-over-year to RMB2.6 billion, of which first year premiums decreased by 16.7% year-over-year to RMB485.3 million and renewal premiums increased by 17.2% year-over-year to RMB2,140.9 million. During the current period, estimated variable renewal commissions related to long-term life insurance products of RMB50.3 million (US$7.8 million) was recognized in our financial statements. The estimated renewal commissions are contingent on future renewals of initial policies or achievement of certain performance targets.Revenues generated from our life insurance business accounted for 76.8% of our total net revenues in the third quarter of 2021.Net revenues for the P&C insurance business were RMB36.9 million (US$5.7 million) for the third quarter of 2021, representing a decrease of 5.9% from RMB39.2 million for the corresponding period in 2020. Net revenues for the P&C insurance business are mainly derived from commissions for short term products, including accident insurance, medical insurance, travel insurance and homeowner insurance products facilitated on Baowang (www.baoxian.com). The decrease was primarily due to a slight decrease in average commission rate due to changes in product mix. Revenues generated from the P&C insurance business accounted for 5.4% of our total net revenues in the third quarter of 2021.

-- Net revenues for the claims adjusting business were RMB121.4 million (US$18.8 million) for the third quarter of 2021, representing an increase of 0.8% from RMB120.4 million for the corresponding period in 2020. Revenues generated from the claims adjusting business accounted for 17.8% of our total net revenues in the third quarter of 2021.

Total operating costs and expenses were RMB655.4 million (US$101.7 million) for the third quarter of 2021, representing a decrease of 11.3% from RMB738.7 million for the corresponding period in 2020.

-- Commission costs were RMB440.9 million (US$68.4 million) for the third quarter of 2021, representing a decrease of 18.6% from RMB541.4 million for the corresponding period in 2020.Commission cost for agency business were RMB367.5 million (US$57.0 million) for the third quarter of 2021, representing a decrease of 22.2% from RMB472.5 million for the corresponding period in 2020.Costs of the life insurance business were RMB341.6 million (US$53.0 million) for the third quarter of 2021, representing a decrease of 23.7% from RMB447.6 million for the corresponding period in 2020. The decrease was in line with the decline in net revenues generated from our life insurance business. Costs incurred by the life insurance business accounted for 77.5% of our total commission costs in the third quarter of 2021.Costs of the P&C insurance business were RMB25.9 million (US$4.0 million) for the third quarter of 2021, representing an increase of 4.0% from RMB24.9 million for the corresponding period in 2020. The costs of the P&C insurance business mainly represent commission costs we incurred for operating Baowang (www.baoxian.com). The increase in the cost of P&C insurance business was mainly due to a slight increase in rates of commission costs paid to agents. Costs incurred by the P&C insurance business accounted for 5.9% of our total commission costs in the third quarter of 2021.Costs of claims adjusting business were RMB73.4 million (US$11.4 million) for the third quarter of 2021, representing an increase of 6.5% from RMB68.9 million for the corresponding period in 2020. Costs incurred by the claims adjusting business accounted for 16.6% of our total commission costs in the third quarter of 2021. -- Selling expenses were RMB71.6 million (US$11.1 million) for the third quarter of 2021, representing a decrease of 8.8% from RMB78.5 million for the corresponding period in 2020. The decrease was due to decreased sales events, offset by increased contributions to employees' defined contribution plans which had a lower base in the same period of last year as the government waived the contribution in 2020 in view of the impact of COVID-19. -- General and administrative expenses were RMB142.9 million (US$22.2 million) for the third quarter of 2021, representing an increase of 20.2% from RMB118.9 million for the corresponding period in 2020. The increase was mainly due to increased expenditures for execution of the Professionalization, Digitalization and Open Platform strategy and increased contributions to employees' defined contribution plans which had a lower base in the same period of last year as the government waived the contribution in 2020 in view of the impact of COVID-19.

As a result of the preceding factors, we recorded an operating income of RMB28.2 million (US$4.4 million) for the third quarter of 2021, representing a decrease of 61.6% from RMB73.3 million for the corresponding period in 2020.

Operating margin was 4.1% for the third quarter of 2021, compared to 9.0% for the corresponding period in 2020.

Investment income was RMB8.8 million (US$1.4 million) for the third quarter of 2021, representing a decrease of 31.8% from RMB12.9 million for the corresponding period in 2020. The investment income in the third quarter of 2021 consisted of yields from short-term investments in financial products. The decrease in investment income was mainly due to a decrease in cash available for investment in short-term investment products.

Income tax expense was RMB9.3 million (US$1.4 million) for the third quarter of 2021, representing a decrease of 56.3% from RMB21.3 million for the corresponding period in 2020 due to the decrease in taxable income. The effective tax rate for the third quarter of 2021 was 21.4% compared with 22.9% for the corresponding period in 2020.

Share of income of affiliates was RMB2.5 million (US$0.4 million) for the third quarter of 2021, representing a decrease of 73.1% from RMB9.3 million for the corresponding period in 2020, mainly attributable to the decrease in income from CNFinance Holdings Limited.

Net income was RMB36.8 million (US$5.7 million) for the third quarter of 2021, representing a decrease of 54.5% from RMB80.8 million for the corresponding period in 2020.

Net income attributable to the Companys shareholders was RMB34.3 million (US$5.3 million) for the third quarter of 2021, representing a decrease of 54.5% from RMB75.3 million for the corresponding period in 2020.

Net margin was 5.0% for the third quarter of 2021 as compared to 9.3% for the corresponding period in 2020.

Basic and diluted net income per ADS were RMB0.64 (US$0.10) and RMB0.64 (US$0.10) for the third quarter of 2021, respectively, representing decreases of 54.3% and 54.3% from RMB1.40 and RMB1.40 for the corresponding period in 2020.

As of September 30, 2021, the Company had RMB1,397.7 million (US$216.9 million) in cash, cash equivalents and short-term investments.

Key Operational Metrics for Fanhuas Online Initiatives in the Third Quarter of 2021:

-- Baowang (www.baoxian.com) - Our direct-to-consumer (DTC) online insurance platform for Accident & Short Term Health insurance(A&H), travel and homeowner insurance:The number of registered customer accounts was 3.5 million as of September 30, 2021, representing an increase of 16.7% from approximately 3.0 million as of September 30, 2020;The number of active customer accounts2 was 116,991 in the third quarter of 2021, representing an increase of 25.3% from 93,374 in the corresponding period of 2020Insurance premiums generated on Baoxian.com was RMB88.8 million (US$13.8 million) in the third quarter of 2021 representing an increase of 8.7% from RMB81.7 million in the corresponding period of 2020. -- Lan Zhanggui - Our one-stop insurance service platform: The number of active users of Lan Zhanggui3 was 28,960 in the third quarter of 2021, as compared to 45,635 in the corresponding period in 2020. The number of active users of Lan Zhanggui who have sold at least one life insurance policy was 16,083 in the third quarter of 2021, as compared to 27,908 in the corresponding period in 2020. The decrease was mainly due to the weakened demand for critical illness insurance after the strong sales prior to the transition to the new critical illness definition framework in the first quarter of 2021;Insurance premiums generated through Lan Zhanggui were RMB531.3 million (US$82.5 million) in the third quarter of 2021, among which life insurance premiums was RMB451.5 million (US$70.1 million) and non-life insurance premiums were RMB79.8 million (US$12.4 million), respectively, as compared to RMB693.2 million total insurance premiums generated through Lan Zhanggui which included RMB552.3 million life insurance premiums and RMB140.9 million non-life insurance premiums in the corresponding period in 2020. -- eHuzhu - Our online mutual aid platform:The number of paying members was 2.3 million as of September 30, 2021, as compared to 3.0 million as of September 30, 2020.

Recent Developments

-- As of September 30, 2021, Fanhua had 307,835 sales agents and 2,054 professional claims adjusters, compared with 424,510 sales agents and 1,615 professional claims adjusters as of September 30, 2020. The decrease in the number of sales agents was mainly due to our efforts to streamline sales force and focus more on high-performing sales agents. The number of performing agents4 was 60,887, and the number of performing agents for selling life insurance products was approximately 16,576 in the third quarter of 2021. As of September 30, 2021, Fanhuas distribution network consisted of 750 sales outlets in 23 provinces and 110 services outlets in 31 provinces, compared with 764 sales outlets in 22 provinces and 121 service outlets in 31 provinces as of September 30, 2020.

Business Outlook

Fanhua expects its operating income to be approximately RMB80 million for the fourth quarter of 2021. This forecast is based on the current market conditions and reflects Fanhuas preliminary estimate, which is subject to change caused by various factors.

Conference Call

The Company will host a conference call to discuss its third quarter 2021 financial results as per the following details.

Time: 8:00 PM Eastern Daylight Time on November 23, 2021 or 9:00 AM Beijing/Hong Kong Time on November 24, 2021

The toll free dial-in numbers:

United States 1-833-239-5565United Kingdom 0800-279-8057France 0805-101-226Germany 0800-182-0671Australia 1-300-717-205Hong Kong, China 800-906-601Japan 0120-925-376South Korea 080-850-0474 The toll dial-in numbers: China (Mainland) 400-820-5286Hong Kong, China & Other Areas +852 30186771 Conference ID #: 6049226

Additionally, a live and archived web cast of this call will be available at: https://edge.media-server.com/mmc/p/swgrgv7o

About Fanhua Inc.

Fanhua Inc. is a leading independent financial services provider. Through our online platforms and offline sales and service network, we offer a wide variety of financial products and services to individuals, including life and property and casualty insurance products. We also provide insurance claims adjusting services, such as damage assessments, surveys, authentications and loss estimations, as well as value-added services, such as emergency vehicle roadside assistance.

Our online platforms include: (1) Lan Zhanggui, an all-in-one platform which allows our agents to access and purchase a wide variety of insurance products, including life insurance, auto insurance, accident insurance, travel insurance and standard health insurance products from multiple insurance companies on their mobile devices; (2) Baowang (www.baoxian.com), an online entry portal for comparing and purchasing short term health, accident, travel and homeowner insurance products and (3) eHuzhu (www.ehuzhu.com), a non-profit online mutual aid platform inChina.

As of September 30, 2021, our distribution and service network is consisted of 750 sales outlets covering 23 provinces, autonomous regions and centrally-administered municipalities and 110 service outlets covering 31 provinces.

For more information about Fanhua Inc., please visit http://ir.fanhuaholdings.com/.

Forward-looking Statements

This press release contains statements of a forward-looking nature. These statements, including the statements relating to the Companys future financial and operating results, are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as will, expects, believes, anticipates, intends, estimates and similar statements. Among other things, management's quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about Fanhua and the industry. Potential risks and uncertainties include, but are not limited to, those relating to its ability to attract and retain productive agents, especially entrepreneurial agents, its ability to maintain existing and develop new business relationships with insurance companies, its ability to execute its growth strategy, its ability to adapt to the evolving regulatory environment in the Chinese insurance industry, its ability to compete effectively against its competitors, quarterly variations in its operating results caused by factors beyond its control and macroeconomic conditions in China, future development of COVID-19 outbreak and their potential impact on the sales of insurance products. All information provided in this press release is as of the date hereof, and Fanhua undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although Fanhua believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by Fanhua is included in Fanhua's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F.

FANHUA INC. Unaudited Condensed Consolidated Balance Sheets (In thousands)

As of December As of September As of 31, 30, September 30, 2020 2021 2021 RMB RMB US$ASSETS: Current assets: Cash and cash equivalents 245,428 615,534 95,529 Restricted cash 83,981 92,830 14,407 Short term investments 1,307,865 782,193 121,394 Accounts receivable, net 583,116 563,235 87,413 Other receivables 50,242 66,547 10,328 Other current assets 41,148 39,222 6,087 Total current assets 2,311,780 2,159,561 335,158 Non-current assets: Restricted bank deposit - 20,689 15,735 2,442 non currentAccounts receivable, net - ? 139,553 21,658 non-currentProperty, plant, and 36,778 44,190 6,858 equipment, netGoodwill and intangible 109,913 109,869 17,051 assets, netDeferred tax assets 10,032 16,128 2,503 Investment in affiliates 357,661 386,175 59,933 Other non-current assets 33,743 31,686 4,918 Right of use assets 200,403 202,902 31,490 Total non-current assets 769,219 946,238 146,853 Total assets 3,080,999 3,105,799 482,011

Current liabilities: Accounts payable 377,386 300,076 46,571 Insurance premium payables 25,421 36,844 5,718 Other payables and accrued expenses 188,448 164,644 25,552 Accrued payroll 105,739 97,733 15,169 Income tax payable 145,983 123,090 19,103 Current operating lease liability 86,233 87,070 13,513 Total current liabilities 929,210 809,457 125,626 Non-current liabilities: Accounts payable ? non-current ? 72,409 11,238 Other tax liabilities 67,219 67,219 10,432 Deferred tax liabilities 26,380 61,199 9,498 Non-current operating lease liability 103,526 104,866 16,274 Total non-current liabilities 197,125 305,693 47,442 Total liabilities 1,126,335 1,115,150 173,068 Ordinary shares 8,088 8,088 1,255 Statutory reserves 553,911 553,911 85,966 Retained earnings 1,306,554 1,355,166 210,318 Accumulated other comprehensive loss (34,994 ) (41,486 ) (6,439 )Total shareholders? equity 1,833,559 1,875,679 291,100 Non-controlling interests 121,105 114,970 17,843 Total equity 1,954,664 1,990,649 308,943 Total liabilities and equity 3,080,999 3,105,799 482,011

FANHUA INC.Unaudited Condensed Consolidated Statements of Income and Comprehensive Income(In thousands, except for shares and per share data)

For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2021 2021 2020 2021 2021 RMB RMB USD RMB RMB US$Net revenues: Agency 691,593 562,127 87,241 2,107,511 2,139,684 332,073 Life insurance 652,370 525,241 81,516 2,006,030 2,037,264 316,178 businessP&C insurance 39,223 36,886 5,725 101,481 102,420 15,895 businessClaims 120,410 121,410 18,842 308,660 328,801 51,029 adjustingTotal net 812,003 683,537 106,083 2,416,171 2,468,485 383,102 revenuesOperatingcosts and expenses:Agency (472,512 ) (367,452 ) (57,028 ) (1,452,077 ) (1,405,090 ) (218,066 )Life insurance (447,634 ) (341,577 ) (53,012 ) (1,381,898 ) (1,331,519 ) (206,648 )BusinessP&C insurance (24,878 ) (25,875 ) (4,016 ) (70,179 ) (73,571 ) (11,418 )BusinessClaims (68,851 ) (73,426 ) (11,396 ) (179,917 ) (205,182 ) (31,844 )adjustingTotaloperating (541,363 ) (440,878 ) (68,424 ) (1,631,994 ) (1,610,272 ) (249,910 )costsSelling (78,460 ) (71,627 ) (11,116 ) (209,859 ) (229,352 ) (35,595 )expensesGeneral andadministrative (118,854 ) (142,869 ) (22,172 ) (344,006 ) (409,292 ) (63,521 )expensesTotaloperating (738,677 ) (655,374 ) (101,712 ) (2,185,859 ) (2,248,916 ) (349,026 )costs andexpensesIncome from 73,326 28,163 4,371 230,312 219,569 34,076 operationsOther income, net:Investment 12,910 8,847 1,373 27,039 25,388 3,940 incomeInterest 3,196 468 73 11,140 1,510 234 incomeOthers, net 3,359 6,116 949 28,747 24,111 3,742 Income fromoperationsbefore income 92,791 43,594 6,766 297,238 270,578 41,992 taxes andshare incomeof affiliatesIncome tax (21,286 ) (9,315 ) (1,446 ) (69,910 ) (57,906 ) (8,987 )expenseShare ofincome of 9,279 2,486 386 1,427 28,813 4,472 affiliatesNet income 80,784 36,765 5,706 228,755 241,485 37,477 Less: netincomeattributable 5,462 2,515 390 8,327 1,445 224 tononcontrollinginterestsNet incomeattributableto the 75,322 34,250 5,316 220,428 240,040 37,253 Company?sshareholders

FANHUA INC.Unaudited Condensed Consolidated Statements of Income and Comprehensive Income-(Continued) (In thousands, except for shares and per share data)

For The Three Months Ended For The Nine Months Ended September 30, September 30, 2020 2021 2021 2020 2021 2021 RMB RMB US$ RMB RMB US$Net income per share:Basic 0.07 0.03 0.01 0.21 0.22 0.03 Diluted 0.07 0.03 0.01 0.21 0.22 0.03

Net income perADS:Basic 1.40 0.64 0.10 4.11 4.47 0.69 Diluted 1.40 0.64 0.10 4.10 4.47 0.69 Shares used incalculating netincome per share: 1,073,891,784 1,073,891,784 1,073,891,784 1,073,891,784 1,073,891,784 1,073,891,784

BasicDiluted 1,074,291,392 1,074,291,210 1,074,291,210 1,074,291,409 1,074,291,220 1,074,291,220

80,784 36,765 5,706 228,755 241,485 37,477 Net incomeOthercomprehensiveincome, net oftax: Foreign 6,302 (279 ) (43 ) 10,159 (7,968 ) (1,237 )currencytranslationadjustmentsShare of othercomprehensive (1,553 ) 197 31 (694 ) (299 ) (46 )(loss) gain ofaffiliatesUnrealized netgains on 3,917 4,469 694 15,702 1,775 276 available-for-saleinvestmentsComprehensive 89,450 41,152 6,388 253,922 234,993 36,470 incomeLess:Comprehensiveincome 5,462 2,515 390 8,327 1,445 224 attributable tothe noncontrollinginterestsComprehensiveincomeattributable to 83,988 38,637 5,998 245,595 233,548 36,246 the Company?sshareholders

FANHUA INC.

Unaudited Condensed Consolidated Statements of Cash Flow (In thousands, except for shares and per share data)

For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2021 2021 2020 2021 2021 RMB RMB US$ RMB RMB US$ OPERATING ACTIVITIESNet income 80,784 36,765 5,706 228,755 241,485 37,477 Adjustments toreconcile netincome to net cash generatedfrom operatingactivities:Investment (8,030 ) (1,736 ) (269 ) (13,132 ) (3,163 ) (491 )incomeShare of income (9,279 ) (2,486 ) (386 ) (1,427 ) (28,813 ) (4,472 )of affiliatesOther non-cash 31,153 10,390 1,612 102,090 5,769 895 adjustmentsChanges inoperating 32,625 (25,228 ) (3,916 ) (14,465 ) (157,196 ) (24,395 )assets andliabilitiesNet cashgenerated from 127,253 17,705 2,747 301,821 58,082 9,014 operatingactivitiesCash flows frominvesting activities:Purchase ofshort term (2,326,840 ) (1,510,370 ) (234,405 ) (6,934,962 ) (7,255,010 ) (1,125,960 )investmentsProceeds fromdisposal of 1,827,416 1,842,576 285,963 7,078,630 7,798,830 1,210,359 short terminvestmentsCash receivedfrom disposal ? ? ? ? 10,200 1,583 of nomineeshareholdingCash paid forloan ? ? ? (90,000 ) ? ? receivables toa third partyOthers (3,832 ) (2,841 ) (441 ) (9,575 ) (20,232 ) (3,140 )Net cash (usedin) generated (503,256 ) 329,365 51,117 44,093 533,788 82,842 from investingactivitiesCash flows fromfinancing activities??Dividends paid (91,865 ) (51,958 ) (8,064 ) (300,695 ) (191,427 ) (29,709 )Repayment ofborrowingrelated to ? ? ? ? (10,200 ) (1,583 )nomineeshareholdingDividenddistributed to ? ? ? ? (7,580 ) (1,176 )non-controllinginterestNet cash usedin financing (91,865 ) (51,958 ) (8,064 ) (300,695 ) (209,207 ) (32,468 )activitiesNet (decrease)increase incash, cash (467,868 ) 295,112 45,800 45,219 382,663 59,388 equivalents andrestricted cashCash, cashequivalents andrestricted cash 786,737 429,330 66,631 265,605 350,098 54,335 at beginning ofperiodEffect ofexchange ratechanges on cash (709 ) (343 ) (53 ) 7,336 (8,662 ) (1,345 )and cashequivalentsCash, cashequivalents andrestricted cash 318,160 724,099 112,378 318,160 724,099 112,378 at end ofperiod

Source: Fanhua Inc.

____________ This announcement contains currency conversions of certain Renminbi (RMB) amounts into U.S. dollars (US$) at specified rates solely for the convenience^ of the reader. Unless otherwise noted, all translations from RMB to U.S.1 dollars are made at a rate of RMB6.4434 to US$1.00, the effective noon buying rate as of September 30, 2021 in The City of New York for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board.^ Active customer accounts are defined as customer accounts that made at least2 one purchase directly throughwww.baoxian.com, its mobile application, or WeChat public account during the specified period.^ Active users of Lan Zhanggui included users who sold at least one insurance3 policy through Lan Zhanggui (through either its mobile application or WeChat public account) during the specific period.^ Performing agents are defined as agents who have sold at least one insurance4 policy during the specified period.

For more information, please contact:Investor RelationsTel: +86 (20) 8388-3191Email: qiusr@fanhuaholdings.com