ZhongAn Online Reports H1 2019 Premium Income of RMB 5.9 Billion and Net Profit of RMB 0.9 Billion, Achieving First-Ever Overall Profitability Since Listing

On August 26, ZhongAn Online (hereinafter referred to as “ZhongAn”), China’s first internet insurance company, released its 2019 interim results report.

As of June 30, ZhongAn served 350 million users in the first half of the year, sold 3.33 billion insurance policies, recorded premium income of RMB 5.9 billion, and achieved a net profit attributable to shareholders of the parent company of RMB 90 million, becoming the only licensed online insurance company to post a profit during the period. This also marks the first time since its listing that ZhongAn has achieved overall corporate profitability.

Data shows that in the first half of the year, ZhongAn’s combined ratio improved by 15.7 percentage points year-on-year to reach 108.3%; underwriting losses decreased by 43.3% year-on-year, narrowing to RMB 490 million, while favorable conditions in the A-share market boosted the company’s investment income to RMB 760 million, representing a year-on-year increase of 118.3%.

“In the first half of 2019, against the backdrop of multiple challenges facing China’s macroeconomic and financial environment, we adhered to our dual-engine strategy of ‘insurance + technology’ and pursued quality-driven growth. Driven by the ecosystems in lifestyle consumption, automotive, and consumer finance, our premium income achieved steady growth. Meanwhile, we continuously optimized our business structure and leveraged technology to drive internal cost reduction and efficiency improvements, resulting in significant enhancement of key financial indicators,” said Jiang Xing, CEO of ZhongAn.

Steady Progress and Meticulous Operations Become ZhongAn’s Theme for the Year. Data shows that ZhongAn recorded premium income of RMB 5.90 billion in the first half of the year, a year-on-year increase of 14.5%.

Specifically, among the five major ecosystems, consumer finance and automotive ecosystems achieved premium growth rates of 16.8% and 25.8%, respectively, in the first half of the year, while the lifestyle consumption ecosystem saw a substantial year-on-year surge of 81.8% in premiums, making the largest contribution to growth. This stems from ZhongAn’s deepened collaboration with high-quality ecosystem partners such as Ant Financial since the beginning of the year, accelerating technological and product innovation.

For example, ZhongAn recently launched its “Worry-Free Return” service on the AliExpress platform for users in eight countries, including the United States, Canada, and Australia. This service includes return insurance and return shipping insurance, extending the company’s domestic experience with return shipping coverage to overseas markets. The initiative aims to address the difficulties associated with returning goods purchased through cross-border e-commerce, which are largely driven by high international logistics costs.

Meanwhile, to concentrate resources on higher-value businesses, ZhongAn proactively reduced certain lower-quality group insurance lines. At the same time, thanks to its refined operational strategies, the core products of its health ecosystem—the Zunxiang series—generated premium income of RMB 1.15 billion in the first half of the year, representing a rapid year-on-year increase of 49.3%.

“To realize the ‘insurance + technology’ dual-engine strategy, we aim to channel resources toward businesses that can build user profiles or currently enable tech empowerment and customization. Following the structural adjustments in the first half of the year, we are now better positioned to operate with greater agility, deepen our core business operations, and thereby achieve stronger growth,” said Deng Ruimin, CFO of ZhongAn.

According to disclosures, ZhongAn achieved premium income of RMB 1.43 billion in July, representing a year-on-year growth rate of 40%.

In addition to business growth, business quality is also a key dimension by which external observers assess ZhongAn’s performance.

Data shows that, despite the impact of business structure adjustments and rising risks across the consumer finance industry, ZhongAn’s combined loss ratio in the first half of the year increased compared to the same period last year. However, due to a significant decline in the expense ratio, particularly the channel expense ratio, ZhongAn’s underwriting business demonstrated strong performance in its combined ratio, which decreased by 15.7 percentage points year-on-year to reach 108.3%.

As total gross written premiums grew steadily, the combined ratio further improved, and investment income increased due to favorable conditions in the A-share market, ZhongAn achieved a turnaround from loss to profit in net profit attributable to shareholders during the first half of the year.

It is evident that the optimization of the channel expense ratio has been a key driver behind ZhongAn’s performance improvement. The financial report further highlights that, driven by continuous optimization of its business structure, the application of emerging technologies, and the brand effect of ZhongAn’s technology capabilities, the company’s overall channel expense ratio has improved, yielding significant results in cost reduction and efficiency enhancement.

ZhongAn has consistently maintained a ratio of engineers and technical personnel exceeding 50% of its total workforce. In the first half of this year, its R&D investment reached RMB 460 million, accounting for approximately 7.8% of its gross written premiums.

Supported by human and financial resources, ZhongAn has applied cutting-edge technologies throughout the entire insurance value chain, significantly enhancing the company’s operational efficiency. For instance, its automation rates for underwriting and claims processing have currently reached 99% and over 95%, respectively, while the adoption rate of AI in online customer service has hit 70%, resulting in a 61% reduction in manpower for online services. Since its launch one year ago, ZhongAn’s intelligent insurance advisor, “ZhongAn Elf,” has served up to 300,000 users in a single day and established the industry’s first insurance intent recognition model, achieving an accuracy rate of over 94%.

As an insurer with a strong focus on technology, ZhongAn currently concentrates its technology exports on its core insurance business. In the first half of the year, it signed contracts with over 170 clients, achieving operating revenue of more than RMB 100 million, a year-on-year increase of 193%. Among these, 64% of existing customers of its insurance system products further purchased additional insurance system modules from the company or upgraded their existing modules in the first half of 2019.

It is worth noting that in the process of exporting insurtech overseas, ZhongAn has also introduced the concepts and experience of new insurance to Southeast Asia, gradually opening up an entirely new market.

In Malaysia, to address the pain point of insufficient operational safety coverage for ride-hailing drivers registered on platforms, ZhongAn partnered with Grab, Southeast Asia’s leading O2O platform, to customize the country’s first internet-based commercial auto insurance product with daily premium payments. Under this model, when a driver begins accepting orders each day, the system automatically deducts a daily premium averaging RM1–2 (Malaysian Ringgit). This usage-based insurance (UBI) auto policy is underwritten by the 14 largest property and casualty insurers in the local market, with ZhongAn providing system integration and technical support.

In Singapore, ZhongAn and Grab have partnered with Income, the country’s largest integrated insurance provider, to launch an on-demand critical illness insurance plan for drivers. Under this plan, Grab platform drivers who enroll will have a premium of SGD 0.1–0.5 automatically deducted from each completed order, with the corresponding critical illness coverage amount accumulating accordingly.

Furthermore, since obtaining the virtual banking license from the Hong Kong Monetary Authority (HKMA) in March, ZA Bank has been intensively preparing for its launch and will provide Hong Kong users with a range of innovative online financial services in the future.

“This year, the company will continue to refine its operations, focusing on leveraging technology to reshape the insurance value chain. We will apply technological development and innovation across the entire insurance process, while maintaining our R&D investment in insurtech and fintech. We will continue to expand our user base in both domestic and international markets, exporting new insurance concepts and the underlying technological capabilities to create value for the industry,” said Jiang Xing.