Joining us today is our Chief Executive Officer, Mr. Chunlin Wang, and Chief Financial Officer, Mr. Peng Ge. They will walk you through our second quarter and first half of 2012 financial and operating results and discussed the progress of our strategic transaction. We will take your questions after the prepared remarks. Now I will turn the call over to Mr. Wang.Chunlin Wang Dear shareholders, investors, analysts, good morning. Thank you for joining us on today's conference call. Mr. Peng Ge and I will begin today's call with a review of our second quarter and first half of 2012 financial and operating performance followed by an update on the progress of our strategic transaction. Then we will go into the Q&A session. The global and domestic macroeconomic situation were increasingly challenging in the first half 2012. China’s GDP growth was estimated to be below 8%, reaching an eight years low. Against this backdrop, the growth slowdown in China’s insurance industry continued into the first half 2012, [with this] to go single digit year-over-year growth of 5.9% in terms of total premiums. P&C insurance sector grew 14.4% from the first half 2011 but the market competition among insurers intensified and insurers had to increase incentives and telemarketing campaigns, which eroded some of their underwriting profits. Life insurance sector on the other hand only grew 0.23% year-over-year in terms of premiums in the first half of 2012, as insurers continue to face difficulty in agent recruitment and retention, (inaudible) a weak insurance base. Impacted by the macroeconomic situation and structural changes of the China’s insurance industry, our total net revenues was up 2.3% year-on-year in the second quarter of 2012. Cost increases however, offset the revenue growth due to the challenging operating environment. As a result our net income attributable to the company's shareholders for the second quarter of 2012 was down 67.2% and non-GAAP net income attributable to the company's shareholders which excluded share-based compensation expenses, was down 34.2% year-over-year.
Looking at our three major business lines, the net revenues of our P&C insurance segment witnessed a marginal decreases of 0.6% year-on-year, primarily due to increased market competition as insurance companies strengthened the investment in direct sales and telemarketing. Besides insurance companies have been increasing commissions paid to their direct sales channels, just we also need to increase commissions payout to our sales agents benchmarking the market level which further squeezed the profits out of our labor driven sales model and reduced the gross margin of our P&C insurance segment.On the life insurance side, impacted by the weak performance in the life insurance industry our sales of new policies recorded a negative growth but the total net revenues derived from life insurance business was up nearly 9% from the year ago quarter, primarily driven by the increase in the sales of short-term health insurance and recurring commissions derived from regular premium insurance policies. Recurring premiums recorded a strong growth of 22.5% year-on-year for the second quarter of 2012. Claims adjusting business was relatively stable with net revenues up 7.9% from the year ago quarter, although its gross margin witnessed a slight decrease. Behind the sudden (inaudible) long, rapid growth of the Chinese insurance market starting from 2011, is inherent efficiency in its expanses development model and industry is in a critical period of structural. In the meantime the regulatory body continues its effort to push the insurance industry in a sustainable and healthy way. Recently, the [CIC] issued a series of rules and regulations that allow insurance companies to broaden their investment scope and continuously launch products and service innovations in an effort to drive insurance companies to strengthen their core competencies in asset management and product design. Read the rest of this transcript for free on seekingalpha.com