Nearly half of ZA ONLINE's digital life ecosystem premium in the first half of the year, with an increasing claims ratio leading to a contraction in underwriting net profit

Today, ZA ONLINE (6060.HK) released its 2024 interim performance report. As of June 30, 2024, ZA ONLINE issued 9.133 billion policies, achieving a total premium income of 15.238 billion yuan, a year-on-year increase of 5.4%. Under the new HKFRS 17 standard, insurance service income was 15.088 billion yuan, a year-on-year increase of 19.0%.

In terms of ecological segmentation, in the first half of 2024, the premium contribution of ZA Health Ecology and Consumer Finance Ecology decreased from 34.7% and 19.3% in 2023 to 29.8% and 14.3% respectively; the premium income contribution of Digital Life Ecology further increased to 48.7%; meanwhile, the premium contribution of Auto Ecology reached 7.2%, also showing an increase.

It is worth mentioning the increase in insurance service income of Digital Life Ecology. It is understood that this is mainly due to ZA's insurance layout in the e-commerce ecology and the growth of innovative products such as pet insurance. Among them, pet insurance grew more than 2.8 times year-on-year, becoming an important performance segment for ZA. Meanwhile, the comprehensive claims ratio of Digital Life Ecology increased, reaching 71.7% after an increase of about 3.3 percentage points, while the comprehensive expense ratio decreased by 3.2 percentage points.

In terms of profit, ZA's net profit attributable to shareholders in the first half of the year was 55 million yuan, a decrease of 166 million yuan compared to the same period last year, a decrease of about 75%, mainly due to the decrease in net profit of the insurance segment. In the first half of the year, ZA's underwriting combined ratio was 97.9%, continuing to achieve underwriting profit, but the decrease in underwriting profit due to the increase in claims ratio led to a slight decline in net profit of the insurance segment.

In the first half of the year, ZA's combined claims ratio increased by 3.6 percentage points to 60.7%, the combined expense ratio optimized by 1.5 percentage points to 37.2%, and the final underwriting combined ratio increased by 2.1 percentage points compared to the same period last year.

In the Technology segment, in the first half of the year, ZA Technology's total revenue from technology output business was 442 million yuan, with domestic technology output revenue of 319 million yuan, a year-on-year increase of 112.7%. Benefiting from product development and operational efficiency improvements, the net loss of the technology output business segment in the first half of the year decreased by 165 million yuan to 82.6 million yuan compared to the same period last year. In terms of international technology output, mainly relying on Peak3, in June 2024, ZA International Technology (ZA Tech) completed a Series A financing of 35 million USD and was renamed Peak3. In the first half of the year, Peak3's technology output achieved revenue of 123 million yuan.

Looking at the performance of the Banking segment, ZA Bank achieved a net income of 255 million Hong Kong dollars in the first half of the year, a year-on-year increase of 45.9%, with the net loss ratio narrowing by 71.7 percentage points to 42.9%