After the market closed on August 28, ZhongAn Online (06060.HK, hereinafter referred to as "ZhongAn"), a Hong Kong-listed Internet insurance company, released its 2023 semi-annual report. The financial report shows that ZhongAn achieved total premiums of 14.463 billion yuan in the first half of the year, a year-on-year increase of 37.5%.

In terms of total premiums, ZhongAn ranks ninth in China’s property and casualty insurance industry, and its market share has further increased; Zhongan is the fastest growing company among the top ten property and casualty insurance companies in China.

Total premium income since ZhongAn’s listing (100 million yuan)

Source: ZhongAn financial report, Lingyi Think Tank

Information released by the State Administration of Financial Supervision shows that the original insurance premium income of the insurance industry in the first half of 2023 was 3.2 trillion yuan, a year-on-year increase of 12.5%. ZhongAn’s growth rate of 37.5% significantly exceeded the industry growth rate. ZhongAn opened in 2013 and became the first Internet insurance company in China. In the past ten years of development, rapid growth has been its main theme.

Since its listing in 2017, ZhongAn’s total premiums have maintained double-digit growth. After proposing a “quality growth” strategy in 2019, the growth rate has slowed down. In the first half of 2023, Against the background of a rebound in industry growth, the growth rate expanded again.

Under the "quality growth" strategy, ZhongAn balances speed and efficiency and will begin to achieve underwriting profits in 2021. In the first half of 2023, Zhongan's comprehensive ratio decreased by 0.7 percentage points year-on-year to 95.8%. At the same time, benefiting from improved investment income, it achieved a net profit of 221 million yuan attributable to shareholders of the parent company, turning a loss year-on-year.

How does ten-year-old Zhongan lead its peers? Looking into the driving force behind it, it can be attributed to the flexible innovation capabilities under the "underground" of technology, the optimization of business models and the diversified business layout.

01 Product Innovation: "Capture" market demand to achieve high growth of "single products"

Zhongan's insurance business is divided into four major ecosystems: health, digital life, consumer finance and automobiles . Among them, in the digital life ecosystem, as people's income levels increase and their lifestyles change, the diverse and ever-changing needs provide broad space for Zhongan's product innovation.

The success of pet insurance demonstrates ZhongAn’s product innovation capabilities that are flexible and responsive to market demand. "Capturing" that pet medical services are growing the fastest in the rapidly developing pet market, ZhongAn has deeply explored this track and innovatively launched differentiated pricing for different types of pets, making the products more personalized and satisfying different levels of needs. Pet protection needs.

The market recognizes Zhongan’s product innovation. In the first half of 2023, Zhongan’s pet insurance premium transactions totaled approximately 200 million yuan, a year-on-year increase of nearly 100%. In addition, the total premium of innovative businesses including pet insurance, broken screen insurance, multi-scenario accident insurance and home property insurance was 1.296 billion yuan, a year-on-year increase of 47.9%.

02 Business model optimization: The proportion of self-operated channels reaches a new high

For Internet insurance companies that do not conduct offline business, cooperation with third-party traffic channels to acquire customers is an important way to expand business Required option. Although this option is "indispensable" for the rapid growth of the company, it also brings a greater cost burden and restricts profitability.

In the early days of ZhongAn’s listing, channel fees once accounted for more than 30% of net premium income. At that time, ZhongAn had not yet achieved profitability, and it proposed a number of measures to improve its performance. One of them was to increase the sales ratio of its own platform and reduce the channel expense ratio. However, premiums contributed by self-operated channels accounted for only 2% in 2018.

Under the background that the development peak of the Internet industry has passed and traffic dividends have declined, the construction of self-operated channels has become even more urgent. In addition, Zhongan proposed the "quality growth" strategy in 2019, and later further proposed "sustainable quality growth". This strategy requires cost reduction and efficiency improvement, and Zhongan further attaches great importance to the construction of self-operated channels.

By 2020, the proportion of premiums contributed by ZhongAn’s self-operated channels will increase to 13%. The 2023 semi-annual report disclosed that in the first half of the year, ZhongAn’s total premiums from self-operated channels increased by 90.6% year-on-year to 4.425 billion yuan, accounting for 30.6%, a year-on-year increase of 8.6 percentage points; the number of paying users of self-operated channels increased by 24.8% year-on-year to 6.18 million, and the number of users The per capita premium reached 712 yuan, a year-on-year increase of 52.7%.

With the substantial growth in total premium income, the proportion of ZhongAn’s self-operated premiums increased from 2% to more than 30% within five years. Behind the rapid growth of self-operated channels is the effective construction of private brands.

The financial report disclosed that ZhongAn leverages its technological strength through multi-scenario, multi-dimensional and multi-form brand communication, and uses self-developed marketing tools to achieve differentiation and precise reach. In the first half of 2023, the average daily usage time of Zhongan Insurance APP increased by 42% year-on-year.

03 Business diversification: new performance growth points

Zhongan’s business diversification starts from technology export and expands to virtual banking and Internet insurance brokerage, and is characterized by internationalization . In the first half of 2023, most of these businesses achieved double-digit revenue growth.

Zhongan Technology (Zhongan Information Technology Services Co., Ltd.), a wholly-owned subsidiary of Zhongan, and Zhongan International (Zhongan Technology (International) Group Co., Ltd.), a holding subsidiary of Zhongan, carry out technology export business.

The former was registered in China in 2016 and focuses on domestic business; the latter was registered in Hong Kong and focuses on international business. Its subsidiary ZA Tech was established in 2018 and was registered in Singapore. Its business has already reached Markets such as Japan, Hong Kong, Southeast Asia and Europe.

The financial report disclosed that benefiting from the recovery of the domestic economy and the continued digital transformation of the global financial industry, Zhongan’s technology division achieved technology output revenue of 267 million yuan in the first half of 2023, a year-on-year increase of 22.0%, of which domestic technology Output revenue was 150 million yuan, a year-on-year increase of 35.5%.

Zhongan continues to maintain a strong technological "background". As of June 30, 2023, Zhongan had a total of 1,795 engineers and technicians, accounting for 47.5%; a total of 609 patent applications, including 174 overseas patent applications were filed. “Investment in technology not only helps reduce costs and increase efficiency, but also provides impetus for technology export business.

In addition to technology export, ZhongAn’s other businesses also have bright spots. The first eight companies in Hong Kong have obtained virtual bank licenses Among the banks, ZA Bank, a subsidiary of Zhongan, was the first to open in March 2020 and is currently the largest virtual bank in Hong Kong. As of June 30, 2023, its number of retail users is close to 700,000 people, net profit income in the first half of the year was HK$152 million, a year-on-year increase of 13.0%, and the net loss rate narrowed by 60 percentage points; ZA Life, which obtained a virtual insurance license and opened in May 2020, achieved premium income of HK$205 million in the first half of the year; Zhongan Insurance brokerage achieved premium income of 207 million yuan, a year-on-year increase of 92.5%.

At present, many of Zhongan’s businesses are still in the investment period and have not yet contributed profits, but the growth in income has brought room for imagination and business in the future. Thanks to synergy and scale effects, these subsidiaries are expected to bring incremental profits in the future

04 Conclusion: Continuous growth is expected

Zhongan, which was founded in 2013, can be said to be. "It's the right time." Statistics from the Insurance Association of China show that from 2013 to 2022, the scale of Internet insurance premiums increased from 29 billion yuan to 478.25 billion yuan, with an average annual compound growth rate of 32.3%.

In May 2023, the Institute of Finance of the Chinese Academy of Social Sciences and the Insurance and Economic Development Research Center of the Chinese Academy of Social Sciences released the "2023 Internet Insurance Claims Innovation" Service Research Report predicts that by 2030, the premium income of Internet insurance will increase nearly six times compared with 2022, or will exceed 2.85 trillion yuan, and the amount of sales and claims completed through Internet channels will be close to 1 trillion yuan. < /p>

In a rapidly growing emerging market, who is better able to seize the opportunity?

Zhongan has taken the lead since its establishment. Online business does not have the "baggage" of traditional business. In the process of developing this innovative business model, technological support is a necessary condition and a core competitive advantage.

With the "underlying" of technology, ZhongAn's demonstrated awareness of innovation, product and service innovation capabilities, and the expansion of new markets and new businesses around technology output have become the driving force for its growth. Combined with the polishing and optimization of its business model, ZhongAn has a bright future.