Mar 28, 2019 (China Knowledge) - Online insurance upstart Zhong An has reported a second year of net losses due to losses in the company’s stock investments, a decline in its insurance business and rising costs of technological research and development.
Zhong An Online Insurance Co reported a net loss of RMB 1.74 billion for 2018, increasing from a net loss of RMB 996 million a year ago. The company which has received investments from both Alibaba and Tencent Holdings suffered the loss despite insurance premium revenue surging nearly 90% from the previous year to RMB 11.3 billion.
As a result, the company has seen its share price fall continuously since its IPO in Hong Kong in September 2017 as investors lose confidence over the company’s advantage over traditional insurers.
Institutional investors have since started to reduce or cut their holdings in the company following the expiry of their post-IPO lock up period as the company continues to fail to deliver on its promises to generate profits higher than its peers.
Meanwhile, the company’s efforts to turn to new growth avenues have also either been met with road blocks or generated poor results. For example, Zhong An’s move into shipping and smartphone insurance to capitalize on a growing number of smartphone and e-commerce users have failed to generate the results it hoped with premium revenues from shipping insurance falling 13.6% year-on-year to RMB 1.1 billion in 2018.
At the same time, Zhong An’s delve into overseas markets in the second half of last year to sell its proprietary software which allows insurers to sell their products online have only suffered a net loss of RMB 453 million on RMB 112 million in revenue due to its cost of research and development and market exploration.
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