ZhongAn narrows losses to US$64m, sees premium boost

March 24 2020 by Andrew Tjaardstra

ZhongAn saw losses narrow by 74% to Rmb454 million (US$64 million) in the last financial year compared with the FY 2018.

Underwriting profitability improved in FY 2019 with the combined operating ratio boosted by 7.6% to 113.3%. The insurtech took a strong line on expenses which decreased by 15.1 percentage points year-on-year to 45.9% in FY 2019.

The company, overseen by chief executive Xing Jiang, also benefitted from the performance of China’s A-share market. The company’s total investment yield was 9.3%, with an investment income of Rmb1.82 billion (US$260 million), up 264% year-on-year.

This investment return is going to be very difficult to replicate after such a volatile start to 2020 so improving underwriting performance is going to be more important than ever to reach overall profitability.

Gross written premiums grew by 30% year-on-year to Rmb14.63 billion (US$2 billion) in 2019.

GWP generated by health insurance recorded a year-on-year increase of 67.6% to 16.7 million customers. GWP realised a year-on-year growth of 146.4% from its core products, the personal clinic policy and healthcare ecosystem of Alipay Insurance.

In addition, ZhongAn increased its strategic cooperation with Ant Financial helping drive year-on-year GWP growth of 130.8% from the lifestyle consumption ecosystem business. ZhongAn also has a partnership with Grab to explore online distribution in South-East Asia.

In FY 2019 alone ZhongAn invested Rmb976.9 million (US$136.7 million) in research and development activities, representing an increase of 15% year-on-year.

As part of its digital services arm, it signed up clients including Sompo and NTUC Income to help them with their digital transformation.

Already in 2020, premium income has surged by 55% year-on-year in the first two months, driven by the demand for online health insurance products amid the coronavirus epidemic.

ZhongAn did not declare any dividend while its shares increased 5% on trading on the Hang Seng Index on Tuesday March 24 (10am) to HK$24.45.

For more on ZhongAn’s opportunities and challenges see here.

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