① By the end of 2023, it had been 13 years since Zhongcheng Insurance had an uncovered loss of nearly 0.4 billion yuan; ② In the first half of 2024, Zhongcheng Insurance achieved new energy vehicle insurance premiums of 0.842 billion yuan, an increase of 49% over the previous year; ③ In the first half of the year, after deducting the impact of income tax expenses, Zhongcheng Insurance's net profit was -0.3191 million yuan;
Financial Services Association, September 5 (Reporter Xia Shuyuan) Zhongcheng Insurance (835987.OC) has once again received support from local state-owned assets in Guangdong. According to the company's latest announcement, on September 2, Guangzhou Financial Holding Group Co., Ltd. (hereinafter referred to as “Guangzhou Financial Holdings”) transferred 0.225 billion shares of Zhongcheng Insurance held by Shanghai Lingxiu Industrial Group Co., Ltd. (hereinafter referred to as “Shanghai Lingxiu”) through the bulk transaction method of the National SME Share Transfer System.
According to reports, as of the end of 2023, in the 13 full fiscal years since Zhongcheng Insurance opened, it still had an uncompensated loss of nearly 0.4 billion yuan on its books. In the first half of 2024, Zhongcheng Insurance achieved auto insurance premium income of 1.394 billion yuan, an increase of 9.34% over the previous year. Among them, NEV insurance premiums were 0.842 billion yuan, an increase of 49% over the previous year.
As an insurance company rooted in the automobile industry chain, Zhongcheng Insurance was founded by GAC Group and others. In the comprehensive reform of car insurance and the rapid evolution of the automobile industry, whether Zhongcheng Insurance can keep up with the new role positioning and development direction of the automobile industry chain and seize new opportunities for the development of new energy vehicle insurance has attracted the attention of the industry.
According to Zhang Lei, CEO of Checha Technology, the high risk rate and high payout rate are a difficult problem in the current development of NEV insurance. Zhongcheng Insurance relies on the GAC Group, and its shareholders have a natural advantage in controlling the industrial chain, which also means stronger risk pricing and control capabilities. Other industry insiders said that the car insurance business is not only highly specialized and competitive in the market, but also faces strict industry supervision. Whether car companies can do professional new energy vehicle insurance is yet to be further tested by the market.
Zhongcheng Insurance's shares changed, and Guangzhou Financial Holdings transferred 0.225 billion shares to become the third largest shareholder
According to Zhongcheng Insurance's latest announcement, on September 2, Guangzhou Financial Holdings transferred 0.225 billion shares of Zhongcheng Insurance held by Shanghai Lingxiu through the bulk transaction method of the National Small and Medium Enterprises Share Transfer System.
According to reports, after the current 9.917% share transfer, Shanghai Lingxiu will completely withdraw from Zhongcheng Insurance's shareholder list, but currently Guangzhou Financial Holdings' shareholding matters still need regulatory approval before they can take effect.
According to public information, Shanghai Lingxiu was founded in 2014. The initial name was Shanghai Lingxiu Asset Management Co., Ltd., which specializes in asset management and investment management. In November 2017, Guangdong Finance Trust listed and transferred shares of Zhongcheng Insurance on the Shanghai Joint Property Exchange due to the need to adjust its own business strategy. On December 5, 2017, Shanghai Lingxiu transferred 0.225 billion shares of Zhongcheng Insurance held by Guangdong Finance Trust. The total transaction price was 0.4545 billion yuan.
Industry insiders said that it is no surprise that Shanghai Lingxiu has withdrawn from Zhongcheng Insurance. Since it did not meet the regulatory requirements for strategic shareholders of insurance companies, Shanghai Lingxiu's shareholder qualifications have never been approved by the regulatory authorities. According to the solvency report for the second quarter, Shanghai Lingxiu is the fifth largest shareholder of Zhongcheng Insurance, but the status of the shares held is shown as “unapproved.”
After approval of this equity transfer, Guangzhou Financial Holdings will become the third largest shareholder of Zhongcheng Insurance other than Guangzhou Automobile Group (including related parties) and Guangzhou Development Zone Holding Group.
According to reports, Guangzhou Financial Holdings was established in December 2006 and is a state-owned financial holding platform established by the Guangzhou Municipal Committee and Municipal Government to integrate municipal financial assets. Zhongcheng Insurance said that introducing Guangzhou Financial Holdings as a new investor will help optimize the shareholding structure of Zhongcheng Insurance and promote further improvement of the corporate governance mechanism. At the same time, it can use its rich resource advantages to enhance the company's professional operating capabilities and give full play to the synergetic benefits of municipal state-owned assets.
The premiums of Zhongcheng Insurance have always been limited to less than 5 billion, and after 13 years of operation, there are still uncovered losses of nearly 0.4 billion yuan
From 2011 to 2012, in order to encourage specialized and differentiated operations of insurance companies, the supervisory authorities approved the establishment of two professional car insurance companies. Zhongcheng Insurance, which was initiated by the GAC Group, was one of them. This was also the first time that a Chinese car company pioneered cross-border operation insurance in the traditional fuel vehicle era.
However, looking back at the development of the past 13 years, as an auto insurance company rooted in the automobile industry chain, the business scale of Zhongcheng Insurance has always been limited to less than 5 billion yuan, and its operation can be described as “lackluster.”
According to the data, from 2011-2017, Zhongcheng Insurance lost money for 7 consecutive years, with net profit of -0.04 billion yuan, -0.058 billion yuan, -0.103 billion yuan, -0.169 billion yuan, -0.083 billion yuan, -0.033 billion yuan, and -0.043 billion yuan, and 7-year heavy loss of -0.529 billion yuan, respectively.
After 7 years of continuous losses, Zhongcheng Insurance finally made a profit in 2018. From 2018 to 2022, Zhongcheng Insurance achieved income of 1.521 billion yuan, 1.786 billion yuan, 1.891 billion yuan, 2.43 billion yuan, and 2.828 billion yuan respectively, with corresponding net profit of 0.006 billion yuan, 0.05 billion yuan, 0.027 billion yuan, 0.051 billion yuan, and 0.044 billion yuan, respectively.
In 2023, Zhongcheng Insurance achieved income from the insurance business of 3.335 billion yuan, a year-on-year increase of 17.92%, net profit - 0.041 billion yuan, and fell into loss again.
Although the insurance business growth rate of Zhongcheng Insurance has been above 16% in the past three years, its profitability is very limited. By the end of 2023, Zhongcheng Insurance had been in business for 13 years, and there was still an uncovered loss of nearly 0.4 billion yuan on its books.
Industry insiders said that the car insurance business is a typical rule of majority and economy of scale, and sufficient business scale can cover exhibition expenses and management costs. The person mentioned above added, “Insurance companies are a two-wheel drive profit model. Before the auto insurance business is established, it is difficult to achieve underwriting profits. Investment income is the key to profit, but investment income is greatly affected by macroeconomic and other factors, especially for short-term capital such as financial insurance, which further tests the company's ability to match assets and liabilities.”
Seizing opportunities for NEV insurance development, NEV insurance premiums soared 49% in the first half of the year
Amid the comprehensive reform of car insurance and the rapid evolution of the automobile industry, Zhongcheng Insurance is seizing new opportunities for the development of new energy vehicle insurance in an attempt to overtake cars in curves.
In the first half of 2024, Zhongcheng Insurance achieved operating income of 1.734 billion yuan, up 24.95% year on year; insurance business revenue was 1.789 billion yuan, up 7.05% year on year; however, there was no increase in profit. After the company reduced income tax expenses in the first half of the year, net profit was -0.3191 million yuan.
It is worth noting that in the first half of 2024, Zhongcheng Insurance achieved auto insurance premium income of 1.394 billion yuan, an increase of 9.34% over the previous year.
As a type of insurance that is expected to carry the future of the car insurance market, Zhongcheng Insurance maintained a rapid growth trend in the first half of the year. In the first half of the year, NEV insurance premium income was 0.842 billion yuan, up 49% year on year, ranking 9th in the market. At the same time, NEV's extended warranty increased 73.66% year on year.
In the future, with the rapid development of new energy vehicles, as an auto insurance company rooted in the automobile industry chain, whether Zhongcheng Insurance can “overtake a corner” and join the second tier of the financial insurance industry has attracted market attention.
Zhang Lei said that real-time collection of massive data covering driving behavior, vehicle conditions, and battery conditions is a major characteristic of new energy vehicles that are different from fuel vehicles. It is also an indispensable factor used by insurance companies for risk pricing, yet it is something that OEMs and battery manufacturers are unwilling to share. Traditional insurers can only seek data from a third party, and accuracy will be discounted. Zhongcheng Insurance relies on the Guangzhou Automobile Group. Its shareholders have the natural advantage of controlling the industrial chain, which also means stronger risk pricing and control capabilities.