Dismantling Zhongan Annual Report: Premiums are increasing rapidly, reducing the background behind narrowing

Dismantling Zhongan Annual Report: Premiums are increasing rapidly, reducing the “background” behind narrowing
The total premium for 2019 will increase by 30% annually to 146.At 29.6 billion, net profit narrowed by 74% and recorded 4.5.4 billion US dollars, this is the data disclosed by Zhongan’s first annual report after “changing the general”.The premium growth rate was about 89% in 2018, and Zhongan ‘s premium growth rate has improved.In the two trading days after the annual report was released on March 23, ZhongAn is expected to grow by 4 respectively.72%, 4.51%, Nomura, China Merchants International Securities, etc. raised Zhongan to buy rating.Since entering 2020, ZhongAn has experienced two rounds of continuous ups and downs.Adhering to the “rejuvenation”, expanding narrowing, and slowing down the growth rate of premiums, what is the “background” of ZhongAn, China’s first Internet insurance company?  Consumer finance is “fading” and two major business segments are supporting the rise in total premiumsNew types of insurance companies quickly became famous through shareholder advantages. “Return freight insurance” was the “knock brick” that initially opened the market.Today, this “brick” belongs to the ecological segment of consumer life.The other four major business sectors are juxtaposed, namely health, consumer finance, auto, consumer life and air travel.  Chen Jing, the former general manager of Zhongan, said in an exclusive interview with Sauna Nightnet in 2016, “In the early days of Zhongan, with the support of shareholders, we tried to return freight insurance in Taobao ecology, which opened a fast path for early exploration.Caused us to take a lot of detours.This is also an important reason why ZhongAn can grow rapidly.”We continue to provide risk protection for returns, product quality, logistics, after-sales service, merchant deposits and other risk protection for China’s mainstream e-commerce platforms (Taobao and Tmall, etc.), as an alternative to the market.”Zhongan said in its 2019 annual report that about 4 users of life-consumption ecological services are insured in 2019.4 billion, policy per capita 16.5 tickets, total premium 37 at the current period.29.4 billion, an annual increase of 130.8%.In the five major ecology, 130.8% is the largest premium increase.  In 2018, Zhong’an Life Consumer Ecosystem once faced a business scope, and the total premium dropped by 9 in that year.6%, not even the location of the largest source of premiums.At that time, the strongest increase was the consumer finance ecology.Through the provision of credit guarantee insurance and other products, the total premiums achieved by this sector accounted for 31%, surpassing the three major ecology of life consumption, travel and health in one fell swoop, and became the sector with the largest contribution of premiums. The premium exceeded the growth rate by 241%.Regarding the reduction of life consumption ecological premiums at that time, Zhong An explained that it was mainly because we actively reduced the underwriting quality replacement business in the digital business, and in addition, our share in the e-commerce ecosystem also decreased slightly.  This situation changed quietly the following year.The industry’s strict supervision and reform is strong, and the total premium of the consumer financial ecosystem has been replaced to 21%, and the premium substitution has been included in 12.2%.Zhongan also admitted in its annual report, “In 2019, in the face of downward pressure from the macro economy, a tighter regulatory environment and rising risks in the consumer finance industry, we proactively tightened risk control standards, strictly monitored asset risk performance, and simultaneously conducted businessThe scale, especially when working with Internet financial platforms, has greatly improved the entry level.The contraction of the consumer finance ecological business, which supports the rapid growth of Zhongan’s premiums, in addition to the consumer life ecology, there is another well-known sector-health ecology, which covers the “unlimited e-life” of medical insurance called “national medical insurance”.ZhongAn Health Ecosystem achieved a total premium of 48 last year.6.0 billion, an increase of 67 from the previous year.6%, corresponding to 33% of total premiums.  Throughout 2019, ZhongAn’s other two major eco-cars, the total premium of air travel started to account for 9%, and the corresponding premium increased by 10 each year.0% and -10.8%.  In the past few years, after the spread of major ecosystems, the scale of Zhongan premiums has increased year by year.In 2018, ZhongAn’s total premiums increased by 89% each year, and it became one of the 10 billion premium property and casualty insurance company clubs.Thanks to the support of the two famous business segments, Zhong An also achieved a total premium increase of up to 30% in 2019.Although the growth rate index dropped significantly in 2018, ZhongAn’s ranking in the national property and casualty insurance market has risen another place, temporarily ranking 11th.  Regarding the development planning of the five major sectors, on March 23, Jiang Xing, general manager and CEO of Zhongan, revealed in an interview with the media such as Sauna.com that Zhongan ‘s focus on the development of the five major ecological developments will not change, only the development path at different stages, The trend is different.In the future, the insurance business will continue to be developed around the five major ecosystems to provide users with comprehensive protection.However, health, consumer finance and automobiles are ecosystems that need to be more actively developed, because in these ecosystems Zhongan’s value chain has been extended, and ultimately a more balanced and diversified business structure will be realized.  ”In the actual development process, we will also consider the impact of the macroeconomic and policy environment, because risk has always been the most critical consideration in our business.Jiang Xing said.  The comprehensive cost rate has been falling for two years in a row. It is hoped that underwriting profit and loss in 2020 will be a big mountain for the invasion of small and medium-sized property insurance companies. Zhongan is no exception.  In fact, soon after its establishment, ZhongAn Insurance achieved profitability.From 2014 to 2016, ZhongAn Insurance’s net profit was approximately 3698 respectively.10,000 yuan, 4425.70,000 yuan, 937.20,000 yuan.However, ZhongAn Insurance appeared in 20179.The forecast of 9.6 billion US dollars will gradually increase to 17 in 2018.9.7 billion yuan.For the reasons for the growth of performance in 2018, ZhongAn attributed it to the increase in underwriting supplements, the decrease in total investment income and the expansion and expansion of technology export business.  In the 2019 performance report, these indicators have improved.The report shows that benefiting from the outstanding performance of the A-share market, Zhongan’s total investment return rate reached 9.3%, achieve 18.15.5 billion investment income.Improvement, due to the optimization of business structure and the improvement of operational efficiency, Zhongan ‘s comprehensive cost rate has been increased from 120 in 2018.9% improved to 113 in 2019.3%, underwriting expectations for 2019 narrowed to 16.98.8 billion.Ranked underwriting expectations for 2018 18.35.4 billion, a loss reduction of 1.36.6 billion, narrowed by 7 per year.4%.The technology export business will achieve operating income in 20192.69.7 billion, an increase of 139 in ten years9%, with a net profit of 3.34.3 billion, a loss reduction of 1 a year.7%.  The comprehensive cost rate is an indicator that reflects the cost of underwriting business of an insurance company, and is equal to the sum of the loss ratio and the expense ratio.In a simple sense, the comprehensive cost rate of insurance companies is less than 100%, which means that the underwriting business is profitable.On the contrary, underwriting commitments can only rely on investment income to feed back profits.  The reporter found out that through the optimization of business structure and the improvement of operational efficiency, Zhongan’s comprehensive cost rate continued to decline.In 2017, ZhongAn’s comprehensive cost rate increased from 104 in the previous year.7% rose to 133.1%.In 2018 and 2019, this indicator replaced 120 respectively.9% and 113.3%.  In an interview with reporters on March 23, Deng Ruimin, deputy general manager of Zhongan, said, “In 2019, we will be profitable in the insurance business, because our investment income is more than 1.8 billion, and underwriting may be 16 billion.”On the basis of the improvement of the above factors, in 2019, Zhongan obtained the net interest rate attributable to shareholders of the parent company.$ 54.1 billion, with a net profit of 17 in 2018.439 trillion US dollars, narrowed by 74% in real terms.  ”I hope that underwriting will be even in 2020, which is also the most important goal, and I am very confident about it.”Deng Ruimin said.  With a “good card” in one hand, what can we expect in the future?  The day after the publication of the annual report, the virtual bank initiated by ZhongAn in Hong Kong officially opened.  On March 24, Zhong An Bank Limited (ZA Bank) formally provided services to all Hong Kong citizens and became the first virtual bank to officially open in Hong Kong.At the same time, ZA Bank launched the current deposit product “ZA Current Go” and released the “30-minute loan commitment”.  According to ZA Bank, from the applicant submitting complete loan application data and documents to obtaining the approval result, the whole process can be completed within 30 minutes.If the waiting time of the applicant exceeds 30 minutes, ZA Bank will give 10 redeemed cash per minute according to the additional waiting time. The cash rebate will be converted until ZA Bank provides the final approval result, up to HKD500.  ZA Bank’s generosity also heralds Zhongan’s awareness of this scarce bank license.Jiang Xing revealed to reporters that the current management team and employee structure of ZA Bank is similar to ZhongAn Insurance. In addition to the core positions, personnel, systems and processes that need to match regulatory requirements, there are also technical personnel who operate technical scenarios for APP development.At present, Zhongan Insurance’s technology personnel account for 49%, and the proportion of technology product operation personnel in virtual banks is also very high, which is also different from traditional banks.  With the advent of ZA Bank, ZhongAn’s financial technology landscape has further developed.According to the disclosure, in addition to the Internet property insurance license and the virtual bank license, ZhongAn also obtained the Internet hospital license in July 2019, and the health insurance ecosystem of “insurance + medical” is more complete.In 2017, Zhongan Small Loan was established in Dazu District, Chongqing. This Internet small loan license also attracted China Telecom ‘s refusal to invest 2 last year.100 million yuan in shares.  Where will the “good card” Zhongan go?Zhongan Chairman Ou Yaping outlined Zhongan ‘s ecological vision in his annual report: We have launched a big blueprint around big health, big finance, and big consumption to create a closed loop of high-quality insurance services.  Sauna, Ye Pang, editor of Chen Peng, Sun Yong proofreading