The "Addition and Subtraction" in ZhongAn Online's financial report

Ask AI · How is AI Reshaping ZhongAn Online’s Business Model?

Text / Dong Xuan

Source / Node Finance

2025 is the year of comprehensive recovery for China’s insurance industry.

According to data disclosed by the China Banking and Insurance Regulatory Commission, the total original insurance premium income across the industry will reach 6.12 trillion yuan in 2025, a year-on-year increase of 7.43%. Among them, life insurance continues to grow at a double-digit rate, with segments like health insurance and new energy vehicle insurance also leading the field.

With industry warming, ZhongAn Online (6060.HK), the “leader” in the internet insurance track, delivered an impressive financial report: total premiums of 61.2k yuan, up 6.9%; net profit attributable to the parent of 35.74B yuan, up 82.55%; after considering valuation changes or impairments of holdings in joint ventures, adjusted net profit attributable to the parent was 1.8 billion yuan, a surge of 198.3% compared to last year’s 603 million yuan.

In Node Finance’s view, ZhongAn Online’s “report card” benefits not only from the rebound of industry beta but also reflects the company’s own strategic alpha adjustments—shifting from scale expansion to profit-driven growth, from a single insurance model to a “Insurance + Technology + Banking” diversified synergy.

However, beneath the halo, issues such as weak non-auto insurance business, increased volatility in claims ratios, high dependence on capital markets for investment, and declining profitability in the technology segment have also surfaced.

Highlights Galore

Overall, ZhongAn Online’s 2025 “answer sheet” is full of highlights.

The insurance segment remains the “ballast stone” supporting the company’s performance growth. In 2025, net profit from the insurance segment soared by 185.4% to 1.68 billion yuan, with underwriting profit reaching 1.1B yuan, a 42.5% increase year-on-year.

The combined ratio (COR) for underwriting improved to 95.8%, down 1.1 percentage points from the previous year. This means that for every 100 yuan of premiums collected, costs and claims expenses amount to 95.8 yuan, indicating sustained strengthening of profitability.

Contributions from the investment side are significant. Benefiting from the market rebound in 2025, the company’s total investment income from domestic insurance funds increased by 59.1% to 1.41B yuan, with the overall investment yield rising to 5.3%.

In terms of ecosystem segments, health and auto insurance performed most prominently.

The former had total premiums of 2.12B yuan, up 22.7%, with underwriting profit increasing by 128.8% to 960 million yuan. Notably, ZhongAn’s “Zhongminbao” high-end medical insurance series, which precisely covers ill patients, saw total premiums grow by 456.1%, becoming a key driver of performance growth.

Image source: ZhongAn Online Financial Report

The latter’s total premiums increased by 34.6%, with new energy vehicle insurance premiums surging by 206.2%, raising its share of total auto insurance premiums to over 28%. The company achieved independent operation of compulsory traffic insurance in Shanghai and Zhejiang, marking a critical step toward autonomous auto insurance management.

Beyond the fundamentals, ZhongAn Online’s second growth curve—the technology output business (ZhongAn Technology / Peak3) and digital banking (ZhongAn Bank / ZA Bank)—also reached milestones.

After turning profitable in 2024, the technology output business continued its profit trend in 2025, with AI capabilities “breaking out” into banking, retail, and other industries; Peak3 completed major updates to its core platform and expanded into new markets.

More notably, ZA Bank achieved a key breakthrough. As Hong Kong’s first digital bank with over 1 million retail customers, ZA Bank first escaped “blood loss” in 2025, with net profit reaching HKD 17.27 million; non-interest income surged 277.9% year-on-year; cost-to-income ratio improved to 77.7%; net interest margin increased against the trend from 2.41% to 2.69%, outperforming the industry average.

The collective rise across multiple metrics validates the feasibility of the digital banking business model.

The Other Side of the Coin

But on the flip side, ZhongAn Online also faces multiple challenges.

According to Node Finance, at its inception, ZhongAn Online aimed to avoid traditional auto insurance and focus on non-auto insurance businesses directly related to internet transactions, such as corporate and household property insurance, freight insurance, liability insurance, and credit guarantees, which initially achieved good results.

In 2025, excluding auto insurance premiums, non-auto insurance service income grew only 4.1%, below the company’s overall growth rate of 5.5%. Notably, premiums for guarantee insurance and accident insurance declined significantly, with revenues of 12.68B yuan and 3.25B yuan respectively, representing decreases of 15.8% and 8.8%.

Additionally, the company’s profit structure still shows “fragility.”

Apart from digital life, the claims ratio in ZhongAn’s health ecosystem increased by 3.1 percentage points, mainly due to product mix changes; auto ecosystem claims ratio rose by 1.7 percentage points, affected by the rising share of new energy vehicle insurance and compulsory traffic insurance.

In the consumer finance ecosystem, total premiums decreased, and outstanding loans shrank, with claims ratio rising by 6.1 percentage points, mainly due to fluctuations in the quality of underlying assets.

Image source: ZhongAn Insurance Financial Report

These subtle changes, though inevitable results of industry trends and business transformation, impose higher requirements on the company’s risk control capabilities.

According to actuarial sensitivity estimates, a 1% fluctuation in expected claims ratio could lead to a pre-tax profit change of 360 million yuan. This indicates that uncontrollable factors such as natural disasters and social activity intensity could directly impact claims ratios and thus disturb overall profit performance.

The 1.85B yuan in investment income fully covers the company’s annual adjusted net profit of 1.8 billion yuan, also revealing the company’s profit dependence on the “beta” of capital markets.

After the implementation of HKFRS 17, asset-side fluctuations will be more directly and transparently transmitted to the profit and loss statement, further increasing the sensitivity of net profit to market conditions. How to cultivate more independent profitability on the underwriting side remains a key challenge for ZhongAn Insurance.

Moreover, although the technology output business remained profitable, its net profit in 2025 was only 52 million yuan, a sharp decline of 33.05% from 78 million yuan in 2024.

AI Becomes a Keyword

Beyond objective financial data, AI is undoubtedly the most frequently mentioned keyword in ZhongAn’s 2025 performance report: over 2 billion large model calls were made throughout the year, and the “ZhongYouLingxi” AI platform fully penetrated business processes.

But at the start of 2026, a more fundamental question faces investors: Is AI at ZhongAn merely an efficiency tool that adds polish, or a growth engine capable of reshaping the business model?

From the financial report, AI’s impact on optimizing ZhongAn’s cost structure has entered a measurable stage: over 45% of health insurance claims are processed automatically by AI, reducing claim handling time from “days” to “seconds”; video damage assessment for auto insurance covers over 50% of cases, greatly reducing on-site survey labor; AI-powered customer service replacement rates continue to rise, further optimizing labor costs.

These achievements are reflected in the improvement of the comprehensive cost ratio (COR): 2025’s COR was 95.8%, down 1.1 percentage points year-on-year.

AI’s contribution to revenue is equally impressive. The high-end medical insurance series in “Zhongminbao” precisely covers ill patients, with premiums increasing by 456.1%. The success of this product relies heavily on AI’s deep involvement in risk identification and product pricing; AI-driven personalized recommendations and services help improve user retention in health ecosystems; AI-based user profiling and demand insights promote cross-ecosystem collaboration among health, auto, and digital life segments.

Given the importance of this new technology, ZhongAn Online’s internal positioning of AI has also undergone a qualitative change. CEO Jiang Xing stated at the earnings conference, “AI strategy is a top priority,” elevating AI from an IT department “technical tool” to a “core capability” integrated across product, operations, risk control, and customer service.

Meanwhile, ZhongAn Online upgraded the “ZhongYouLingxi” AI platform from a technical support unit to an independent business unit, with clear revenue and profit targets. By the end of 2025, the platform had nearly 220 active bots, with over 2 billion large model calls annually.

The leap from “cost center” to “profit center” marks a turning point in validating AI’s value at ZhongAn Online, but whether it can be effectively commercialized and generate incremental growth remains uncertain.

In summary, ZhongAn Online’s 2025 performance, to some extent, signals the end of China’s internet insurance industry’s rough expansion phase. The shift from “premium leverage-driven” to “underwriting profit-driven” models, from “burning money for expansion” to “internal growth,” is both a result of the company’s strategic adjustment and a response to the restructuring of valuation logic for insurance tech stocks in the capital market.

But issues such as weak non-auto insurance, increased claims ratio volatility, high dependence on capital markets for investment, and declining profitability in the tech segment cannot be ignored. Whether ZhongAn Online can continue this “bright” performance into 2026 remains to be seen by the market.

Cover image generated by AI