ZhongAn

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ZhongAn Online P&C Insurance Co. Ltd.
6060:HK
ISINCNE100002QY7
IndustryInsurance
Founded2013
Headquarters
Shanghai
,
China
Area served
China, Asia Region
Key people
Yaping Ou (Chairman and Executive Director), Jin "Jeffrey" Chen (CEO and Executive Director)
Jack Ma (Founder), Pony Ma (Founder), Ma Mingzhe (Founder)
ServicesOnline insurance
SubsidiariesZhongAn International ZhongAn Information and Technology Services and Co.
Websitehttps://www.zhongan.com/

ZhongAn Online P&C Insurance Co. Ltd. is a Chinese online-only insurance company. Founded in 2013, the company's headquarters are based in Shanghai, China. ZhongAn's chairman and executive director is Yaping Ou who is also an executive director. The company's CEO is Jin “Jeffrey” Chen but was initially co-founded by China's most notable business magnates- the chairmen of Chinese multinational conglomerates. This includes Alibaba’s Jack Ma, Tencent's Pony Ma and Ping An Insurance's Mingzhe Ma.[1] Together, the three businessmen created the country’s first and largest insurance company to offer and sell products through the internet. There are five important areas of service that the company offers and sells; lifestyle consumption, consumer finance, health, auto and travel. In addition to insurance services, ZhongAn has established numerous subsidiaries such as ZhongAn International and ZhongAn Information and Technology Services and Co. As of January 2019, ZhongAn has a total market capitalization of HK$38.5 billion.[2]

Markets[edit]

The insurance technology company is listed on the Hong Kong Stock Exchange under the stock code ‘6060:HK’. ZhongAn began floating on the stock exchange in September 2017 and raised US$1.5 billion on its opening day, at a valuation of US$11 billion.[3] This made it the largest initial public offering in Hong Kong in 2017 and also the first insurance technology offering that Hong Kong had. ZhongAn's share prices increased by more than 9% on the opening day of their public trading to HK$65.20. Alvin Cheung Chi-Wai, an associate director at Prudential Brokerage in Hong Kong, said, “The main reason is not ZhongAn displaying attractive quality but the three 'horses' backing it” – in reference to the company's three original founders, as ‘Ma’ in Chinese translates to meaning ‘horse’. The day after its IPO, its share price declined by 2.7%. In China, the insurtech industry is expected to grow significantly from approximately US$37 billion in 2015 to US$174 billion in 2020.[4] By the end of 2016, ZhongAn made up 0.9% of China's insurtech market and gained a competitive advantage by having a special digital insurance license before its competitors.[3]

Products and services[edit]

Since ZhongAn's inception, it has up to 460 million users and has issued over 5.8 billion insurance policies. A significant proportion of its customer base (60%), are aged 20 to 35 and most consumers from this age group bought their first insurance policy through the company. ZhongAn offers a wide range of personalised products and services to its Chinese consumers.[1]

Business[edit]

ZhongAn has a subsidiary called ZhongAn International, founded in December 2017. It aims to explore ways to expand its business internationally and seek investment opportunities in financial technology and insurance technology. In August 2018, the company announced that a shareholder agreement has been signed between ZhongAn International and Japan's multinational conglomerate, Softbank under Softbank Vision Fund. SoftBank Vision Fund was established to invest in cutting-edge and innovative technology companies and has a strong reputation in selectively investing new-economy companies. This shareholder agreement intends to help ZhongAn's business services go beyond the domestic market and reach the international marketplace. With specialisations in insurance technology, financial technology and other technology solutions businesses, this long-term partnership will assist the company in commercialising its business and operations beyond China, with particular focus on the rest of Asia's markets.[5] This synergy will allow ZhongAn International to create a new ‘operating entity’ to connect with SoftBank to further assist in leveraging global opportunities.[5]

In August 2018, ZhongAn created a second partnership with a Boston-based biotechnology company, Orig3n. The aim of this partnership is to offer health technology solutions for the Chinese market. Orig3n will support ZhongAn's technology product expansion with its expertise in genetic and DNA testing applications. This collaboration comes with plans to establish a brand new laboratory in Shanghai, China, concentrating specifically on healthcare technology applications and innovations. The location of Shanghai is also beneficial as it will allow the two companies to serve Chinese consumers with ‘personalised, efficient and convenient’ healthcare solutions.[6]

ZhongAn Information and Technology Services and Co., or simply known as ZhongAn Technology, is also another subsidiary that was created in November 2016. ZhongAn Technology focuses on R&D (research and development). The new subsidiary has four key areas of focus: artificial intelligence, blockchain technology, cloud computing and data driven analytics. Since 2016, ZhongAn Technology has created a wide range of innovative products in areas such as insurance, consumer finance, asset management and healthcare. A notable example is its platform that is blockchain-based created for the purpose of bridging the gap between business partners and data masters when it comes to insurance transactions. ZhongAn has also incorporated Ethereum technology into its own platform to explore new ways of the expanding the platform further.[7] In 2018, ZhongAn Technology announced a partnership agreement with Chinese insurance company, AXA Tianping. This partnership marked the launch of ZhongAn's SaaS platform (software-as-a-service) which aims to offer insurance companies with three key products; accessibility to medical records that come from medical institutions, online services that assist in providing compensation for insurance companies and risk management services.

Furthermore, ZhongAn also aims to expand their businesses overseas in the Japanese market through their newly formed business partnership with Sompo Japan Nipponka. As a Japanese insurance company, Sompo Holdings is one of the largest property insurance companies in the Japanese market. This partnership will aim to create an insurance service that is entirely cloud-based. ZhongAn will provide an opportunity for the Japanese company to enhance its insurance services through technology and digitalisation. As such, Sompo Japan Nipponka will directly provide ZhongAn with an opportunity to enter the international market, specifically focusing on the Asian region. ZhongAn's entry into Japan is expected to have a significant impact as opposed to Japan's insurance startups such as JustInCase.[8] This is because demand for digitised products in insurance have increased. Overall, both companies have high hopes that their synergy will digitally transform the insurance industry by offering new, innovative products in 2019.[9]

Founders and key individuals[edit]

Yaping Ou is the current executive chairman of ZhongAn since its inception in 2013. He was previously the chairman and executive director of property development company, Sinolink Worldwide Holdings, Ltd from 1997 to 2013. He also came 62nd on Forbes’ list of 400 richest Chinese individuals in 2005, with a net worth of US$273 million. Ou has worked in numerous investing and trading companies in both the China region and Hong Kong. ZhongAn's chairman appointed his son, Jinyu Ou, as a non-executive director to provide professional assistance to the Board. He is also part of the Investment Strategy Committee of ZhongAn.  The CEO of ZhongAn is Jin “Jeffrey” Chen who was previously a vice president in China Merchants Fund Management Co Ltd from 2003 to 2005 and also in China Merchants Securities from 2002 and 2003. The company, however, was originally co-founded by Jack Ma from Alibaba, Pony Ma from Tencent Holdings and Ma Mingzhe from Ping An Insurance Group. All three entrepreneurs are also the some of company's largest shareholders.[10] It is a common belief that Hong Kong's retail investors don't have much knowledge in ZhongAn's company or is purpose and have only invested due to the three Ma's.[11]

References[edit]

  1. ^ a b "Chinese online insurer ZhongAn raises $1.5bn in IPO". The Financial Times. Retrieved 12 September 2018.
  2. ^ "Grab and ZhongAn team up for insurance joint venture in Southeast Asia". South China Morning Post. 2019-01-16. Retrieved 2019-05-15.
  3. ^ a b "ZhongAn benefits from the Ma effect". Nikkei Asia. Retrieved October 1, 2018.
  4. ^ Sheng, Cliff; Leonard, Matthew; Gangu, Prashanth; Liu, Kang (2016). "China Insuretech Industry Report" (PDF). Oliver Wyman. Retrieved 2 October 2018.
  5. ^ a b "China's Online Insurer ZhongAn to Get Investment from SoftBank for Overseas Growth". PR Newswire. August 21, 2018. Retrieved September 1, 2018.
  6. ^ AIR, team (August 2, 2018). "China: ZhongAn in health tech partnership". Asia Insurance Review. Retrieved September 30, 2018.
  7. ^ GmbH, finanzen.net. "ZhongAn Online Embarks Global Technology Empowerment Journey Expanding Insurance Boundary | Markets Insider". markets.businessinsider.com. Retrieved 2018-11-06.
  8. ^ Obe, Mitsuru (October 25, 2018). "ZhongAn Insurance's entry sparks shift to digital products in Japan". Nikkei Asia Review. Retrieved November 1, 2018.
  9. ^ Verdict, Staff (September 28, 2018). "ZhongAn, Sompo Japan enter technology-driven alliance". Life Insurance International. Retrieved November 1, 2018.
  10. ^ "Three horses, one unicorn". Week In China. October 20, 2017. Retrieved October 16, 2018.
  11. ^ Yang, Qiaoling; Wei, Yiyang; Liu, Xiao. "The Story Behind ZhongAn's Blockbuster IPO". China Go Abroad. Retrieved November 2, 2018.