Insurtech platforms Waterdrop and Huixuan's first-year premiums increased significantly in the first three quarters, and their stock prices fell by about 90% under strong supervision

Reporter | Lv Wenqi Edit |

U.S.-listed insurtech platforms WDH and Huize (HUIZ) have released third-quarter data.

In the first three quarters of this year, The net operating income of Shuidi was 779.3 million yuan, down 9.7% year-on-year; the operating loss was 513 million yuan, a decrease of 37.1% compared with the previous quarter; and the net loss was 477 million yuan, a decrease of 27.3% compared with the previous quarter.

Huixuan's revenue in the first three quarters of this year was 1.269 billion yuan, an increase of 52.46% year-on-year; the third quarter revenue was 315 million yuan, a net loss attributable to the parent company of 128 million yuan, a year-on-year take profit and loss, and the net profit in the same period last year was 5.469 million yuan.

In the first three quarters, the water drop insurance platform under Waterdrop achieved a cumulative premium income of 14.464 billion yuan in the first year, an increase of 37.5% year-on-year, which has exceeded the whole year of 2020. In the third quarter, Wise Choice achieved a first-year premium of 510 million yuan, an increase of 42.7% year-on-year, and combined with the performance of the first half of the year, WiseChoice accumulated first-year premiums of 1.701 billion yuan in the third quarter of this year, an increase of 52.9% year-on-year.

Judging from the first year's premium performance, Shui Di and HuiXuan still recorded great growth in the environment of the dual pressure of insurance industry supervision and life insurance reform.

In the first three quarters of this year, the insurance industry achieved a cumulative original insurance premium income of 3.65 trillion yuan, down 1.29% year-on-year, compared with 8.44% year-on-year in the same period last year. From the perspective of life insurance operations, the cumulative original premium income in the first three quarters of this year was 2.77 trillion yuan, down 0.13% year-on-year, and the same period in 2020 increased by 7.37% year-on-year.

Still, both Waterdrop and Wisecho's share prices have fallen sharply since mid-year. As of press time, Waterdrop shares were $1.40, down 88 percent from the issue price of $12, and WiseChoice was $1.38, down 90 percent from its intraday high of $13.85 in February.

Since last year, Internet insurance has ushered in wave after wave of regulatory norms. In the second half of this year alone, the Banking and Insurance Regulatory Commission has repeatedly issued documents to crack down on Internet insurance chaos.

On August 11, the China Banking and Insurance Regulatory Commission issued the Notice on Carrying Out Special Rectification work on Internet insurance chaos to insurance institutions and other insurance institutions. This special rectification is mainly aimed at the frequent chaos areas such as Internet insurance product management, sales management, claims management, and information security, focusing on rectifying prominent problems such as misleading sales, forced tying, high costs, illegal operations, and user information leakage.

On October 20, the China Banking and Insurance Regulatory Commission (CBIRC) issued the Risk Tips on Preventing Insurance Induced Sales, which once again pointed to the long-standing problem of "inducing insurance" with a high complaint rate. The water drop insurance broker under the water drop company was also fined 1 million yuan by the Banking and Insurance Regulatory Commission for selling insurance products for "first month/first period 0 yuan" and "first month/first period 3 yuan".

After that, the Internet insurance industry ushered in a strong earthquake, and the Banking and Insurance Regulatory Commission issued the Notice on Further Regulating the Matters Related to the Internet Life Insurance Business of Insurance Institutions, and a large number of Internet insurance products that did not meet the regulatory requirements, especially participating insurance, faced removal at the end of the year, and the number of insurance products that could be sold online shrank significantly.

Under the volatility of stock prices and the successive regulatory pressures, analysts are still optimistic about the future performance of Internet insurance platforms.

Steven Lam, an analyst at Bloomberg Insurance, pointed out that in the long run, the domestic supervision of Internet insurance products is very beneficial to the Internet insurance head platform. Better protection of consumers is also conducive to the sustainable development of the industry and can encourage innovation in service quality rather than vicious competition.

Major brokerages also give water droplets a "buy" rating. Bank of America analysis pointed out that the company has long been optimistic about the growth prospects of China's Internet insurance and health insurance market, and Waterdrop will gain more market share from insurance brokers, online platforms and traditional insurance companies, with a target price of $8.75 for the next 12 months.

Goldman Sachs believes that Waterdrop continues to expand its cooperation with other healthcare providers to promote long-term insurance premium growth, and customer loyalty will further increase, with a target price of $9.50 for the next 12 months.