ZhongAn Insurance's net profit in 2021 increased by 110% year-on-year, and the automobile ecology became the only negative growth scenario

Reporter | Miao Yiwei

On the afternoon of March 23, China's first Internet insurance company, ZhongAn Insurance (06060. HK) has released its 2021 annual report.

According to the financial report, the total premium of ZhongAn Insurance reached 20.37 billion yuan, an increase of 21.9% year-on-year, achieving the first underwriting profit since its inception, and the comprehensive cost ratio fell to 99.6% year by year; last year, the company achieved a net profit attributable to the mother of 1.16 billion yuan, an increase of 110.3% year-on-year, achieving profitability for two consecutive years.

Overall, the health ecological business income accounted for 38% of the total premium income, is still the mainstay of the insurance business, the consumer finance ecological premium income achieved 106% growth, becoming the fastest growing business segment in premium income, the automobile ecology due to the comprehensive reform of automobile insurance and other reasons The premium income fell sharply by 29% year-on-year.

The management of ZhongAn Insurance said at the press conference that in 2021, behind the realization of underwriting profits is the result of user-centered iterative products, strengthening its own channels and cross-selling, and technology-enabled cost reduction and efficiency. Last year, the premium contribution scale of self-operated channels reached 3.6 billion yuan, an increase of 66.4% year-on-year, accounting for 18% of the company's overall premium. At the same time, through the cross-penetration of ecology, the repurchase rate of self-operated channels reached about 33%,; the per capita income contribution of users reached 506 yuan, up 20.2% year-on-year.

According to the interface news reporter, since 2021, ZhongAn Insurance has greatly increased its investment in live broadcasting and short videos on traffic-side platforms such as Douyin, Kuaishou, and Tencent, and invited well-known actor Zhang Guoguo as a spokesperson, etc., in an attempt to open up the "national-level cognition" of consumers.

Specifically, in terms of health ecology, the financial report shows that the total health ecological premium of ZhongAn Insurance is about 7.7 billion yuan, an increase of 16% year-on-year, and the comprehensive compensation rate of health ecology in 2021 is 51.3%, an increase of 9.6 percentage points year-on-year. In 2021, the rate of healthy ecological channels was 18.3%, down 8.6 percentage points year-on-year, mainly due to the contribution of premiums from the company's direct channels and the further increase in the proportion of renewal premiums.

The management of ZhongAn Insurance said at the annual report press conference that the construction of self-operated channels and product upgrades have become the keywords of healthy ecology. Management revealed that ZhongAn's "Privilege e-Life" series of millions of medical insurance has a renewal rate of more than 80% through its own channels, while the repurchase rate of its own channels has reached 33%.

In addition, ZhongAn continues to upgrade the "Exclusive e-Life" series of millions of medical insurance products in 2021, for example, it integrates more than 30 kinds of rare disease drugs for minors, including immune cell therapy drugs, etc. in the aspect of serious diseases, and launches exclusive medical plans for people with chronic diseases such as hepatitis B and hypertension, as well as serving different customer groups such as women and the elderly; the Exclusive e-Life 2022 edition, as a million medical treatment that can be used without illness, integrates a full range of value-added services such as cancer screening, Internet medical treatment, and traditional Chinese medicine.

In terms of digital life ecology, the premium income will be 7.3 billion yuan in 2021, accounting for 36% of the premium income, an increase of 16% year-on-year. "Channel diversification" has become a key word, and e-commerce platforms such as short videos have become the direction of new business expansion.

According to the financial report, ZhongAn Insurance launched live broadcast and short video e-commerce return freight insurance in 2021, and the return freight insurance premium from the new e-commerce company accounted for more than 20% of the overall return insurance business last year. In 2021, the loss rate of the digital life ecology was about 67.6%, up about 5.6 percentage points year-on-year, mainly because Taobao and Tmall, the main e-commerce channels that cooperated since May 2021, have reduced the price of return freight insurance, reduced the return cost of merchants and users, and improved the user experience. In addition, innovative businesses such as pet insurance, broken screen insurance, and worry-free insurance have greatly increased their proportion of total digital life premiums.

In terms of consumer finance ecology, the premium income was 4.447 billion yuan, accounting for 22% of the total premium income, and the premium increased by 106% year-on-year, which is the fastest growing segment of ZhongAn Insurance premium. The financial report disclosed that ZhongAn Insurance actively cooperates with various Internet scene platforms, such as Wing Payment and iQiyi in communication scenarios, and provides credit guarantee insurance through joint risk control and scene joint ventures with Internet financial platforms Lexin and Immediate Consumer Finance. In order to strictly control risks, the proportion of premiums distributed in the consumer finance ecosystem reached 16% in the whole year, further increasing from 7.9% in 2020. ZhongAn Insurance disclosed that as of the end of 2021, the balance of loans underwritten by the consumer finance ecosystem was 19.4 billion yuan, which was lower than the growth of premium income in the same period.

The automobile ecology has become the only scenario with negative year-on-year growth.

The financial report disclosed that the premium income of automotive ecology in 2021 was 946 million yuan, accounting for 5% of the total premium income, and the premium income fell by 29% year-on-year. At the same time, the car insurance payout ratio increased from 55.7% to 68.0%.

ZhongAn's "Baodui Auto Insurance" in the automotive ecosystem is a car insurance product co-insured with Ping An Property & Casualty Insurance, ZhongAn is mainly responsible for docking Internet platforms and auto aftermarket channels to obtain customers, and Ping An Property & Casualty insurance is responsible for offline claims. ZhongAn said that in 2021, it will maintain a steady development strategy in the auto insurance business, and at the same time, adhering to the principle of benefiting consumers through the comprehensive reform of auto insurance, the average premium has declined.

The management of ZhongAn Insurance said at the press conference that it also saw potential opportunities for new energy vehicles, UBI and other new product forms in the auto insurance ecology, and would actively prepare.

In addition to the insurance business, in terms of technology output, in 2021, ZhongAn's technology output revenue reached 520 million yuan, an increase of 42% year-on-year; the net loss was 385 million yuan, and the year-on-year net loss ratio was further narrowed.

According to the financial report, last year, ZhongAn served 109 customers in the insurance industry chain, an increase of 34 year-on-year. The product matrix and customer base are more abundant, such as ZhongAn's integrated security products launched by ZhongAn in Compliance Technology, which signed 41 customers, and the insurance agency middle office helped more than 20 major economic agency companies complete digital transformation and seize the online business opportunities.

In terms of overseas business layout, in 2021, ZhongAn International's son in Hong Kong also continued to break through the milestone of development. As the first virtual bank officially opened in Hong Kong, ZA Bank, a virtual bank under ZhongAn International, has exceeded 500,000 users by the end of last year in less than two years, with a deposit balance of HK$7 billion and a loan balance of about 4 times year-on-year to about HK$2.5 billion. In January 2022, ZA Bank entered the investment business, becoming the first virtual bank in Hong Kong to be issued a SFC No. 1 license (securities trading), and will continue to expand its corporate banking business in addition to individual consumers, helping SMEs to unlock their potential through convenient and flexible banking products and services, and hoping to achieve breakeven of ZA Bank within 2-3 years.