ZhongAn Online P & C Insurance Co Ltd
HKEX:6060
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Earnings Call Analysis
Q4-2023 Analysis
ZhongAn Online P & C Insurance Co Ltd
2023 marks a significant milestone for ZhongAn, celebrating its 10th anniversary. Over these years, the company has grown into China's ninth-largest P&C insurance company, issuing over 64 billion policies to more than 500 million users. The company takes pride in its integration of technology with insurance, striving to digitally transform the global insurance industry, a feat recognized as it entered the Fortune China 500 ranking for the first time in 2023.
Amidst global economic challenges, ZhongAn has achieved a total P&C GWP of RMB 29.51 billion, a significant 24.7% year-over-year increase. The company has also successfully maintained a combined ratio of 95.2% and returned to profitability with a net profit of RMB 554 million in its insurance business segment and RMB 4.078 billion at the group level, benefiting from one-time investment income of approximately RMB 3.784 billion. However, ZhongAn International was deconsolidated from the group's financials following its status change on August 14, 2023.
ZhongAn's proprietary channels soared, with GWP hitting RMB 7.614 billion and contributing to 25.8% of the company's total premium. The number of paying users expanded by a remarkable 47.6%, while the provider channels saw a 14.4% growth hitting RMB 6.515 billion. Short-term critical illness insurance surged with a 130.6% growth. The digital lifestyle ecosystem achieved a GWP of RMB 12.563 billion, growing at 41.6%, while the aviation and travel business also spiked by 89% year-over-year. The company's pet insurance performed extraordinarily well with an exceeding 150% growth rate.
ZhongAn is also experiencing robust growth within its consumer finance ecosystem and auto insurance, both increasing by 22.5% and 24.7% respectively. The GWP for new energy vehicle insurance grew by an outstanding 196% year-over-year, showcasing the company's proactive approach to capitalizing on new opportunities in the evolving automotive sector.
Aligning with ESG principles and UN sustainable development goals, ZhongAn has launched over 50 green insurance products, demonstrating its commitment to environmental conservation and social responsibility. These products have covered various sectors exhibiting the company's endeavors in driving sustainable practices.
The technology export business of ZhongAn revealed a healthy 40% revenue growth, underpinning the company's successful expansion beyond its core market and solidifying its role as a digital transformation leader in various industrial sectors.
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Good afternoon. Welcome, everyone, to attendance 2023 annual announcements of ZhongAn Online. Please be noted that you are all on mute session and also before the end, there will be a Q&A and if you would like to ask a question [Operator instructions]. Now I'll give the floor to the first speaker,Ă‚Â [Indiscernible].
English investors, analysts and media friends. Good afternoon. Welcome, everyone, to attend 2023 annual announcement of ZhongAn online. I am the Director of IR [Juan Ming]. First of all, I'll be introducing the management from ZhongAn Online, General Manager and CEO, Mr. Zhang Xin from ZhongAn Online, CFO and Chief Investment Officer, Mr. [Indiscernible]; and Executive Vice General Manager and Secretary of the Board of [Indiscernible] and also [Shire], the Director and President of ZhongAn International. Now I'll give the floor to the first speaker, Jiang Xing.
So good afternoon, dear friends and media friends and investors and analysts. My name is Jiang Xing, the General Manager of ZhongAn Online. Welcome, everyone, to attendance 2023 annual announcement of ZhongAn Online, and thank you very much for your support and also attention to ZhongAn. The year 2023 holds a special significance for ZhongAn as its marks the 10th anniversary of the company. There is a nation in Chinese saying that it takes 10 years to shop in the [sort]. Over the past decade, we have transformed from the child learning how to work and gradually explore to become the ninth largest P&C insurance company in terms of premium volume in China. Throughout these 10 years, ZhongAn has consistently adhered to the mission of empowering finance with technologies and providing insurance service with the current and continues to deepen our understanding and application of technology in finance. We are here to do deal and strategy of insurance plus technology, deeply integrating technology with insurance throughout the entire process, while at the same time also driving the digital transformation of the global insurance industry. Over the past 10 years, we have issued over 64 billion policies and served over 500 million users. Last year, we were listed for the first time in the Fortune China 500 ranking for 2023, becoming the only [Indiscernible] company to be selected. Next, I'll be sharing with you the specific achievements of the company in 2023. In 2023, amidst a complex international environment, the overall Chinese economy showed signs of recovery improvement despite the ever-changing economic landscape, we broadly move forward. In 2023, we achieved a total P&C GWP of RMB29.51 billion, representing a year-on-year increase of 24.7%, almost 25% already. And also you can see that securing the top market positioning in Internet P&C insurance sector. Starting from January 2023, we adapted to the new insurance contract accounting standard IFRS 17. On this new standard, the revenue from P&C insurance service amounted to RMB27.5 million to 1 billion, a year-on-year increase of 24.2%. Upholding our core operational philosophy centered around users and effective branding our proprietary channels achieved a total premium of RMB7.6 billion with a year-on-year growth rate of 31%, surpassing the overall company due to a peak growth rate. In 2023, we continued to implement our strategy of sustainable growth rate quality, maintaining a combined ratio of 95.2% and achieving the underwriting profit for 3 consecutive years, surpassing the industrial average. Our overall investment income significantly improved compared with the previous year. As a result the insurance business segment achieved a net profit of RMB554 million successful returning losses into profit. And at the group level, we achieved a net profit attributable to the parent company of RMB4.078 billion in 2023, including approximately RMB3.784 billion of onetime investment income. So the adjustment was made because ZhongAn International ceased to be a subsidiary of the company from August 14 of 2023 and was no longer counted as the equity method investee. So we exclude this onetime investment company and we adjusted net profit at to the parent company was RMB2.94 billion, also a turnaround into profit compared to the previous year. Meanwhile, the overall asset quality remains solid and our solvency was robust, earning us a rating of Moody's BAA1 with a positive outlook and also AM best, A- with a stable outlook from the international rating agencies. As one of the ZhongAn strategic engines, our technology business also made breakthroughs last year, benefiting from recovery of domestic economy and the ongoing digital transformation of the global financial industry. Our total revenue from the Technology export business reached RMB829 million, a year-on-year increase of 40%. So our virtual bank in Hong Kong ZA Bank also continued its rapid growth momentum, achieving a net income of HKD 366 million in 2023, a year-on-year increase of 2.9%. Over the past 10 years, we have been providing users with various types of insurance covering scenarios such as e-commerce and travel starting from internet platforms. And through this high-frequency products and services, we have gained consumer recognition and trust in ZhongAn brand. In recent years, we have increased the investment in building the ZhongAn brand while vigorously developing the proprietary channels. So the aim is to deliver the carrying hand and service of ZhongAn directly to our users through our app and nearly 30 proprietary channels and also private domains. So we are here a long-term philosophy of managing and developing ZhongAn's proprietary channels, and we strive to provide users with convenient and affordable comprehensive protection for their lives. In 2023, the GWP of our provider channels reached RMB7.614 billion while the total premium contributed further increasing to 25.8%. The number of paying users grew by 47.6% to RMB1.36 million with an average premium per capita of RMB 670. We have enriched the product matrix of our proprietary channels, upgrading services around the 4 major ecosystems, including the medical health, family and [Pat] and to better provide the value to users. The proportion of repeated users premiums in proprietary channels premium reached 39% with an average policy per person of 1.6. Moreover, the euro rate increased by 3.3 percentage points to 88.3%. In the future, we will continue to upgrade the products and services of our proprietary channels and making ZhongAn brand even more deeply integrated into people's mindsets. And next, I would like to introduce you the main operational achievements for a more major, 4 major ecosystem is in 2023. The first one is about health ecosystem. In 2023, we achieved a GMP of RMB9.806 billion, a year-on-year increase of 9.2%. Among them, our flagship health insurance product personal credit policy has contributed and continued to reiterate and innovate since its launch, meeting the users' constantly upgrading and personalized health needs, demonstrating a strong vitality. So in 2023 -- so you can see that the total premium of the million RMB, medical insurance represented by personal clinical policy increased by 14.4% year-on-year, reaching RMB6.515 billion in total premium. And among them the 0 deductible version, personal clinic policy provides users with practical protection through more flexible product combinations and has been well recognized. So while the personal clinic policy continues to penetrate into the mass market, we have observed the specific needs of the segmented consumer targets and the high-end version -- a medium to high-end version of personal clinic policies launched last year focusing on people with medical upgraded needs. So achieving a rapid premium growth also upon its launch. So apart from this flagship product, in 2023, our short-term critical illness insurance product has also become popular for meeting the consumers' entrance protection needs. And also, it became another blockbuster product with the annual GWP breaking RMB1 billion, reaching RMB1.341 billion GWP and a year-on-year growth of 130.6%. Additionally, our outpatient insurance products, which inevitably integrate online consultation, medication purchase and offline medical services through Internet hospitals experience in 2023 total premium growth of 157.3% in 2023, reaching RMB327 million. In the health ecosystem, the number of paying users reached 19.96 million in 2023, a year-on-year growth of 23.6%. Upholding our initial aspiration of providing health insurance for 1 million people by the end of 2023, we have provided the health protection to over 125 million insured. Next, digital lifestyle ecosystem. In 2023, we had a breakthrough of RMB10 billion threshold, achieving a GWP of RMB12.563 billion with a strong year-on-year growth rate of 41.6%. We actively embrace the evolution and development of e-commerce formats, providing products, covering various types of e-commerce scenarios such as platform-based or live streaming short videos and private domains, leveraging our technology capabilities and product development expertise, we introduced the products covering the entire e-commerce value chain, including return shipping insurance, product quality assurance amount, security and also logistics guarantees. For instance, in 2023, the total premium growth rate of our e-commerce business reached 25.3%, reaching RMB6.593 billion. Also, at the same time last year, with the rapid recovery of domestic tourism industry, the aviation and travel business sector also benefited from the industrials revival. Our aviation and travel business achieved a total premium of RMB3.242 billion, a year-on-year growth of 89%, and we cover the major OTA platforms as well as the other specialized apps of airlines, providing travel protection for over 70 million travelers. Apart from the e-commerce and travel, in the ecosystem, we're also having [Indiscernible] business, achieving a GWP of RMB2.728 billion, representing a year-on-year growth of 43.8% and increasing their proportion to 22% of the total premium against the digital lifestyle ecosystem as a whole. So one of the important products is the pet insurance and last year, we had RMB500 million in terms of the total transaction volume with the growth rate of exceeding 150%. And also, in total, we have served over 4.645 million pet owners, mainly driven by an increasing level of pet familiarization, leading to a higher average spending per pet. In terms of the product offerings, in addition to pet medical and accidental coverage we have collaborated with the ecosystem partners to launch various innovative insurance products such as the chronic pet disease and pet food safety [Indiscernible]. This expansion has broken the boundary to both our company and the industry. Also, we have been partnering with nearly 14,000 off-line pet hospitals and service institutions. In our innovative business endeavors, we -- apart from the pet insurance are closely following the development trends of new consumption patterns, exploring new growth trajectories within the digital lifestyle ecosystem. We have achieved breakthroughs in accidental insurance like volumes for lifestyle and fashion as well as sports and other scenarios. We have provided various services, including liability insurance and quality insurance to over 1.5 million drone owners and additionally, our service-oriented home insurance and also has serviced over 500,000 households. Also we have joined the Shanghai Family Insurance Alliance, a customized and inclusive home insurance initiative in Shanghai to better meet the practical needs of Shanghai residents and newcomers, thus promoting the inclusive insurance practice. Next, take a look at the consumer finance ecosystem. And we focus on high-quality customers in small and dispersed Internet scenarios. In 2023, our total premium or GDP of our consumer finance ecosystem reached RMB5.551 billion, a year-on-year increase of 22.5%. We constantly and consistently adhere to a strategy of prudent and steady development and strictly enforce the rigorous risk control standards and also dynamically adjust our risk reserves based on the macroeconomic conditions. This approach has sustained the underwriting profitability in our business and additionally, we offer insurance products from other ecosystems to users within the consumer finance ecosystem and meeting their comprehensive protection needs. So last, not least, we are talking about the auto insurance ecosystem, and we achieved a GWP of RMB1.58 billion for the year with a year-on-year growth of 24.7%, and we actively embrace the opportunities and policy dividends of new energy vehicle insurance providing insurance products and services for new energy vehicle owners from over 100 brands. And also, this has injected a new momentum into the overall growth of automotive insurance. In 2023, the GWP of [Indiscernible] vehicle insurance grew by over 196% compared to the previous year. And also, we are providing comprehensive services to vehicle owners, including the coverage for driving accidents and aftermarket service and also videos claims, et cetera, offering them with more comprehensive and integrated services. Although -- no, we already talked to you about the 4 ecosystems. And next. I would like to share with you our practice in ESG. So although a property insurance product provides a short-term production within a year, our business philosophy and the interaction with users are focusing on a long-term fashion. So we also integrate the ESG principles and the United Nations' sustainable development goals into ZhongAn's business development and practice in environment protection and social responsibility. Specifically, we have launched over 50 green insurance products covering different areas such as new energy environment protection and [Indiscernible], with a risk average amounted to RMB20 billion. And in terms of the protection provided to micro and small enterprises, we offer 95 products covering various potential risks in their operations and our blockbuster product that [Denenber] has insured over 14,000 micro and small enterprises and spanning multiple industries. In the inclusive insurance field, we have developed more protection products covering groups such as the illness of patients and women and elderly and children. Our online operation model in the insurance technology enables us to conduct the business with lower carbon emissions contributing to carbon [Indiscernible], and our ESG rating has also steadily improved in recent years. In the future, we will further implement the ZhongAn sustainable development strategy to create more value for users, shareholders and also the society as a whole. Now I would like to invite [Indiscernible] to introduce the progress of our technology segment.
Thank you very much Simon for your sharing. Next, I will delve into the progress of our group and technology, research and development as well as technology export. We are strategically positioned ourselves in a cutting-edge technologies such as [Indiscernible] intelligence, reshaping various aspects of insurance value chain through technology, leveraging our solid foundation in AI cumulative for the past decade in 2023, we released the first AI and general insurance, AIGC application and white paper and domestic insurance industry. This white paper delineates over 30 specific application scenarios and points of AIGC application and insurance field. Also, at the same time, we have produced [Indiscernible] capabilities and launched the AIGC Middle platform, [Lingxi] as well as the operational managers platform featuring Dialog Generation AI and pilot, which enhances the cold export efficiency. AI has improved efficiency across various aspects with our organization, including product development, marketing, risk control and management and daily operations. In terms of customer service, we utilize AIGC to construct intelligent customer service system based on the customer intent, personalized services are provided, resulting in faster and more customized responses by embedding AIGC into our online customer service, we have been in an average time saving of over 10 seconds per person and session while also assisting and identifying the high-risk customers and reduce the complaint rate. And on the marketing front, AIGC enables the rapid generation of promotional videos enhancing the video production efficiency and reducing the costs. With the assistance of AI code helpers and assistance, the development efficiency within the group has increased by over 20% within 6 months. And we firmly believe that through this continuous investment in AI, ZhongAn will definitely maintain our leading positioning in this area. In 2023, our technology export business experienced a remarkable growth with an overall revenue growth rate of reaching 40% and also the total revenue of the technology export within the group reached RMB829 million. We signed contracts with 101 domestic and foreign clients along the industrial chain and successfully assisting them in achieving the digital transformation. By the end of last year, our technology business had a cumulative service of 848 clients from various industries. Additionally, we broke through industrial barriers signing contracts with 12 clients from the banking and securities industry throughout the year. We are actively expanding into nonfinancial industries, providing ZhongAn's general software and solutions. So we deeply understand that digital transformation is an inevitable trend of the industry and a key factor in housing our competitiveness. So at the beginning of 2023, also, we hoped that we are going to comprehensively create more values with our users. And in the beginning of 2023, with the insurance of the overall layout plan of building digital China by State Council, the construction of Digital China was proposed and its important engine for emerging Chinese modernization in digital era by 2025, a horizontally interconnected and vertically integrated and well coordinated their integrated development pattern will be formed and making significant progress in the construction of Digital China. Our technology export business focuses on the exploration and also research on this cutting-edge technologies, such as artificial intelligence, big data, cloud computing, et cetera, leveraging the advantages of our ZhongAn's ecosystem and validated through practical business operations. We have established a value delivery system based on the technology and service. So in 2023, our domestic technology export business grew by over 70% compared to the previous year. And also, we signed contracts with 91 clients along the industrial industrial chain with over 30 clients have contracted amounts exceeding RMB1 million, for clients exceeding 10 million in terms of the value of contracts. So these achievements are really remarkable and actually the best against our history. So we do have 3 series for our products. This is production series business growth, series and digital infrastructure series, covering the entire business process of the insurance industry comprehensively in 2023. Our next-generation property insurance core system made has been successfully launched and used by multiple P&C companies in China. In the field of data, we have collaborated with several life insurance companies to develop data platforms and intelligent data solutions, providing services such as data planning, data governance and data platform construction. Starting from 2023, the insurance industry began implementing a new insurance contract standard IFRS 17 integrated platform and our independently developed system has been successfully operational for 2 years. And in 2023, we prototized this IFRS 17 integrated platform for external output and assisting many insurance companies, including the Mitsubishi Insurance and other general China insurance and insurance, et cetera. So in the future, we are going to continuously leverage the technology power of ZhongAn to contribute to the development of digital economy and contraction of Digital China. This is pretty much my part. And next, I'll hand over to Wayne of introducing the development of international -- ZhongAn International, please?
Thank you very much, [Juan Ming] for your introduction about the ZhongAn technology. So next, I will be introducing to you the business of the international technology expo through the ZA Tech. We were founded in 2018 and headquartered in Singapore. ZA Tech focuses on exporting the advanced insurance core systems and digital insurance technology expertise to overseas insurance companies and intermediaries. And also, it is committed to setting new standards for global digital insurance technology. Currently, ZA tech business footprint expands across Japan, Southeast Asia, Hong Kong and Europe. And ZA Tech has built a global digital operating system for insurance industry, servicing clients, categorizing to insurers and internet platforms; and two, that's a unique cloud native and modulize and no code or local digital solutions, including the insurance core systems, distribution systems, customer data platforms and AI solutions, it provides digital infrastructure support for various insurance business models, all insurance product lines and every aspect of the end-to-end insurance business value chain. For the insurance company's clients, our next-generation distributed insurance core system, Graphene can assist locally connecting various ecosystem partners to launch the fragmented and scenario-based insurance products tailored to the local environment. So for the Internet platform and clients, we provide the low-code insurance distribution solution infusion, which helps the Internet platforms offering more value-added services to their end users and improve the traffic monetization efficiency.Ă‚Â In 2023 July, our core system product Graphene, successfully entered the track of the traditional core business systems and was deployed for one of the leading insurance companies in Central and Eastern Europe and the system in achieving full coverage of traditional car insurance, end-to-end functionalities seamlessly, supporting 5 countries in Europe market and we're going to have a very rapid replication and developed deployment. Not only it is about this, but also we would like to establish an ecosystem based on insurance operation systems for mutual benefits. For instance, in 2023 through the strategic collaboration with leading traffic channels in Japan, we generated positive network effects by establishing a strategic partnership with the major tractor channels in Japan through our interest distribution platform, Fusion, targeting the insurance -- the intermediaries and also simultaneously attracting top-tier insurance companies in Japan to launch the product on leading e-commerce platform like Yahoo! Japan and leading the e-wallets like PayPay through their [Forsta] core system product [Indiscernible]. So this arrangement not only attracted the new insurance company clients through the broadcasting channels, but also helped to expand the client base of insurance intermediaries and agencies continuously. So this synergetic growth between the insurance companies and also other agencies contributed to the collaborative expansion of both segments.Ă‚Â In 2023, our international export revenue reached RMB325 million with a sustainable revenue accounting for 51%, driving the gross profit margin to increase by 6 percentage points to 46%. In addition to our overseas technology export business, in Hong Kong, Virtual Bank, ZA Bank has been committed to building all-in-one on digital financial services platform since its establishment in 2020, providing rich, convenient and inclusive financial services to retail users and small and medium-sized enterprises in 2023, ZA Bank achieved improvements in our business metrics. As of the December 31 of 223, ZA Bank has approximately HKD11.7 billion in deposit balances, representing year-on-year growth of 27.5%. Total loan balance was approximately HKD5.4 billion with a year-on-year growth of 10%. Additionally, benefiting from interest rate hike cycle and continuous [enringement] of loan products, ZA Bank's net interest margin increased from 1.84% billion of in the same period of 2022 to 1.94%. And during the reporting period, with the launch of new products, ZA Bank recorded a net income of HDK366 million, a year-on-year increase of 40% and noninterest income accounting for approximately 43% of the total. At the same time, as the ZA Bank focuses on the business quality and operational efficiency improvement, resulting in an improvement of 85.6 basis points in the net loss ratio.Ă‚Â At current stage, ZA Bank has become one of the most feature-rich virtual banks in Hong Kong market with a highly quality customer base. Our retail banking side, ZA Bank in addition to traditional banking products and services, enhancing user engagement through the continuous development of a bit gamified experience while also facilitating the online account opening for [finite] to Hong Kong, resulting in a very good and also strong user growth of those visitor users. Currently speaking, 1 out of every 10 adults in Hong Kong is a ZA Bank user as the Hong Kong's first Virtual Bank of exceeding HKD10 billion in customer deposits, ZA Bank is honored to be recognized as the best mobile banking app in Asia by [C] Partners 2023 International Mobile Banking benchmark and ranked 6th globally. And also, at the same time, in February of 2024, ZA Bank officially launched its -- the U.S. stock trading service to Hong Kong users by entering into the world's largest stock market with ZA Bank users can seize the growth potential of the most valuable and influential companies globally, and this marks another milestone for ZA Bank on its journey to create an all-in-one digital financial platform.Ă‚Â On the corporate banking side, to further promote the concept of inclusive finance in Hong Kong and support of financial technology transformation of the bank industry ZA Bank officially launched its enterprise client e-onboarding service in April of 2023. This service provides a local small and medium-sized enterprises with a rapid account opening experience and addressed in pain points such as the difficulty of slowliness of account opening for SMEs led by seizing market opportunities. Through this rapid account opening function, corporate clients can complete account opening application in a list -- that's a little of 6 minutes and account opening process completed in as fast as 2 hours, enabling them to enjoy the one-stop banking service. Looking ahead, the international will continue to leverage the synergetic effect of various brands to enhance user experience and create more values for users in their future digital financial experiences. We will continue to support the development of financial technology in Hong Kong contributing to establishment of global inferential financial center and promote financial inclusion.Ă‚Â Now I'd like to invite Gaofeng to share the financial performance in 2023.
Thank you. For the 3 presenters for the summarization of review of our business performance as last year, now providing an overview of growth, including the overall financial like insurance service revenue, profit and investments and balance sheet. Now I would like to introduce to you the situation of our interest service revenue under the new standard. In 2023, our domestic P&C business achieved insurance service revenue of RMB27.521 billion, an increasing of 24.2% year-on-year with rapid evident across all the major four ecosystems. In the health ecosystem, we adhere to our original escalation of providing national medical insurance for 100 million people in 2023, while maintaining sustainable growth in our product -- core product personal credit policy, we witnessed a remarkable growth in new products such as outpatient insurance and critical illness insurance. At the same time, we enhanced our service capabilities to meet the rapid growing health care needs of our users and establish long-term competitive edges. And the revenue from health ecosystem reached RMB8.599 billion in 2023 with a year-on-year growth of 7.9%. In digital life ecosystem, we seized the opportunity arising from the growth in new e-commerce format and recovery of the aviation and travel industry last year, leveraging our insights into our users' behavior and data analytics capabilities will bring this rapid growth in innovative products such as plan insurance A2023, the revenue from digital lifestyle ecosystem insurance services reached RMB12.446 billion, surpassing RMB10 billion mark with a year-over-year growth of 39.9%. In the customer finance ecosystem, we are here to risk control guidance and develop business prudently. In 2023, the revenue service reached RMB5.1 billion with a increase of 19.8% in automotive vehicle system. The revenue from auto insurance ecosystem services reached RMB1.434 billion and year-on-year growth of 30.9% outperforming [Indiscernible]. In 2023 benefited from a hearing strategy of sustainable growth rate quality, the company achieved a combined ratio of 95.2% under the new standard and marking 3 consecutive years of underwriting profit and surpass industry average. Next, I'll present the loss ratio and expense ratio for each ecosystem. In 2023, the combined ratio of the health ecosystem was 87.2%, maintaining underwriting profitability and improving by 1.4 percentage points and comprehensive loss ratio was 34.2%, a decrease of 14.8 percentage points year-on-year, mainly due to optimization of our product structure and an increase in the proportion of new policies and improved risk control. The comprehensive expense ratio for the health care ecosystem in 2023 was 53%, rising 13.4 percentage points, primarily due to increased investment in user growth and retention during the reporting period. In 2023, we are benefiting the strategy of sustainable growth with quality. We have reached a comprehensive underwriting combined ratio of 95.2% and also realizing a very good and stable growth. And also, while we are increasing the volume, the total profitability of underwriting has reached a very good growth. And in 2023, the comprehensive also the particular consumer finance combined ratio of 96.4%, increasing by 6.8 percentage points and the loss ratio of 68.4%, primarily due to the rising of the risk. The expense ratio of 28%, reducing by 13.4 percentage points. This is primarily due to the increasing of our users of proprietary channel. For the auto insurance, the profitability improving, the combined ratio of this ecosystem, 95.4%, improving by 2 percentage points and impacted by the mobility and the loss ratio increasing by 5.5 percentage points to 65.1%. But due to the cost reduction and lean management, the expense ratio reduced by 7.5% points to 30.3%. And next, I would like to give a recap of our investment performance from last year. In 2023, our total investment income from domestic insurance funds amounted to RMB720 million and total investment yield of 1.9%, show a significant improvement compared to the previous year. This improvement was primarily attributable to a strong performance of domestic bond market and our steady fast commitment to prudent investment principles. We have strengthened the risk control measures and leading to value appreciation of insurance funds. As of December 31, 2023, the total investment assets of our domestic insurance investment amounted to RMB38.2 billion. Among these fixed income investment amounted to 75%, mainly in domestic bonds and bond funds, representing 65% of our total investment assets among the bonds that we hold, those with the external credit rating of AA or higher accounted for 99% were those rated AAA or higher accounted to 77%. Regarding equity investments, considering the volatility in HI market last year, we proactively reduced the equity positioning. And at the end of 2023, we combined the proportion of stock and core funds was 6.7%, decreasing by 4.1 percentage points compared to the end of 2022, when it was 10.8%. In 2023, financial indicators of various segments within the group shows improvements in entrance division achieved a stable and rising underwriting profit, significant improvement in investment income and a certain degree of improvement in foreign exchange gains and losses. As a result, the insurance division successfully turned losses into profits achieving a net profit of RMB554 million and technology export sector despite achieving 40% increase in revenue, further narrowed the net loss ratio. Also, ZA Bank with a revenue growth rate of exceeding 40%, we have improvement in both the amount of ratio -- amount and ratio of losses starting from August 14th of 2023. ZA International is no longer recognized as associate company and is a low banker, accounted for under the equity method, I think that one-time investment income was RMB3.784 billion and is recognized. Overall speaking, we achieved a net profit of RMB3.845 billion in 2023, with a net profit attributable to share equity holders of parent company of RMB4.878 billion, excluding the impact of onetime investment income, we adjusted net profit attributable to the equity holders of RMB294 million marking a turnaround from losses in 2023. At the end of 2023, the total assets of the group amounted to RMB42.9 billion, a decrease of RMB4.7 billion compared to the end of 2022. The amount affected by the exclusion of ZA International from financial statement decreased by RMB10.5 billion. Actually, this impact, total asset increased by RMB5.7 billion. At the end of 2023, the group's attributable net assets was RMB20.1 billion, an increase of RMB4.3 billion compared to the end of 2022. And the amount of active exclusion of the ZA International from financial segments increased by RMB3.8 billion. At end of 2023, the company comprehensive solvency ratio was 240%, a decrease of approximately 59 percentage points compared to the end of 2022. Approximately 42 percentage points of the decrease was attributable to exclusion of ZA International from [Indiscernible]. The company's core solvency ratio to 229%, a decrease of 56 percentage points compared to the end of 2022, approximately 38 percentage points of decrease was attributable to this exclusion of ZA International. 2024 marks the beginning of next decade for ZhongAn. We would like to express our gratitude to our users for choosing products and services, we also extend our thanks to investors and [managers] in the capital market from a continuous trust on ZhongAn. We remain committed to our original aspiration, empowering the financial business with technologies and providing insurance services with a caring hand.
Thank you. And now we can have Q&A. Please, we'll have more than 2 questions at a time, and please identify ourselves before the questions.Ă‚Â Thank you. We would like to remind you that if you'd like to ask a question [Operator instructions]. And the first question from the line is Michael Li from Bank of America.
So thank you for having this opportunity. I'm from Bank of America. I have 2 questions. The first question is that how do we balance the growth rate and profit margin of the business? In the past years, our growth rate was maintained at around 20% to 25%, in the future, while we have expanded our business volume, do you think that this profit margin could be maintained? And also, at the same time, you may sacrifice the profit. And could you give us some guidance that in the next 2 to 3 years of time? How that we're going to maintain the growth rate? And also, what is the situation for the net profit? And also how or what is the level of the combined ratio that we would like to keep. The second question is about the ZA Bank in Hong Kong. In Hong Kong, we'd be actually seeing a very good and rapid growth in Hong Kong. So you're taking a lot of deposits also from the Hong Kong users. In 2024, you're going to actually break even right start making profit in 2024. Do you still maintain that target? When you start to make profit, what kind of strategic changes that you're going to have. Also, we have noticed that some of your stock, U.S. stock exchange and what is the thinking behind?
Thank you very much, Michael, for this question. So for the first question, with regards to the balance of the growth rate and also the profit margin, you know that 2024 is the 11th year of our foundation. So together with our expectations of the macroeconomy and also the overall situation in the future, we're going to adhere to the long-term and stable sustainable growth instead of just driving the growth of GWP, but also paying attention to the underwriting profit, the quality of our product and also the profitability of noninsurance products. Renewal rate and also the additional cross and upselling rates are something that we are going to focus. So in terms of the overall growth, we are also going to have 4 ecosystems. So starting from the value of the users and starting to protect the comprehensively more to the users and also to have a cross and upselling more, also using proprietary channels and private domains to improve the conversion rate. So in the interim result announcement of this year, we're going to share with you more. And also, we are confident that on top of that, we are going to maintain a very robust growth on the underwriting profitability and to provide more inclusive and more value for money products. So for ZA Bank, please.Ă‚Â As for your second question, you have already noticed that for the ZA Bank, we have already started to do transaction on the U.S. dollar stock market and also what kind of next moves that we are going to have. In the annual announcement just now, we already said that in 2023, in terms of retaining our corporate banking of ZA Bank, we made a lot of achievements and this year, we are going to focus on these 2 areas and providing more excellent services. Also, as for the Hong Kong users and also the U.S. stock market transaction service, we have launched this year, right, successfully. So we hope that we can provide a one-stop solution for our users and this is going to satisfy the need of diversifying the asset portfolio of our users. So at the constant only, we are providing service to the existing users, but also attracting more U.S. stock investors to Hong Kong and finally differentiated advantages. And also the ZA Bank app is going to be a very important platform for us to attract new users. The existing products were really welcoming. By the end of 2013, you can see that we had in total the volume of HKD 1 billion apart from providing the equity and stocks and shares, we're also providing more choices to our users. Also, the ZA Bank is going to be optimizing ourselves continuously and getting satisfactory results. In the long run, the digital bank of ZA Bank is also going to improve our adherence and user stickiness and hopefully, that the operational efficiency could be improved. Thank you.
Thank you very much for this question. Now we are going to have the next question. The next question is Jianan Han from Nomura
Thank you for this opportunity. I have 2 questions. So the first question is that we would like to ask the management that -- how do you think about the corporation and competition among the 3 shareholders. One is Alibaba and Tencent and Ping An. So how do you think about the collaboration and competition with them? And second question is about the health care insurance. So by having the regulation change if we look into the future, how do you think about the perspective and how to think about the profitability? It seems that the profitability improvement is pretty big.
Thank you for your question. So let me have the first question. which is about the business of our shareholders. So we had actually over 430 different customers from Internet industry, and we go with them and talking about the possibilities of the insurance industry. Also, we are here to the mindset of inclusive win-win and also collaborating with our partners. In terms of the channel collaborations we are actually paying attention to, for instance, [Indiscernible] and also Alibaba, in terms of the collaboration on the health care insurance. So pretty we have a very thorough collaborations with them. And also together with PingAn, we are having the coinsurance together with them for the years for auto insurance. And also on the WeChat platform, we're also positioning ourselves in the Tencent videos in those private domains with Tencent. So I do believe that this is an open and win-win collaboration. So as for the ZhongAn's business, we do have hundreds of different partners from deferent ecosystems, so you can see that we are having a very good performance and also our total performance is more robust. Also at the same time, in our report, we have already said that we are exploring the establishment of more proprietary channels and reaching to more end users at the current stage.Ă‚Â Now we have over 30% of our users from the larger channels.Ă‚Â Second question about the health ecosystem and health care insurance and some of the aspects on the future. So the health ecosystem is actually the ecosystem that we focus for years. In 2024, we are going to maintain the momentum of robust growth. And in 2023, we had a steady user growth. So we are in favor of this market for a very long time. Now the total market potential is RMB1 trillion and still the diverse demands and needs, and we need to innovate and integrate more to satisfy the needs of our users. So in the past, we have seized the opportunities and we believe that in the future there will be more opportunities for innovations. So the health ecosystem, we have several parts: the first is the personal clinic policy, which is going to be continuously growing. So also last year, we had a version of 0 deductible to actually lower down the threshold of purchase so that we're going to cover more people and also [Indiscernible]. Also, we have medium to high-end products available tailoring to a more customized users from the corporations.Ă‚Â Also at the same time apart from the RMB1 million health care insurance, we are also focusing on the health management. So by having more inclusive pricing and also very enriched product items we also are going to launch the products like, they call it illness products, which experienced hundreds of percentage of growth. And also another breakthrough is that by integrating with Internet health care and ZhongAn online hospitals our outpatient and emergent entrance was really welcoming. So by having more innovations on our product and business models, I do believe that this is going to be offering more potentials to our future.On the overall basis, for the health care industry in China, we are continuously paying attention to it and we hope that we can cover the diversified needs in a very enriched way. And also, we firmly believe that ZhongAn will have more market potential and opportunities to seize from. Thank you.
Thank very much. Let's wait for another question. The next question is from CICC, Yuping Ma. You may have the opportunity, please.
Thank you for this opportunity. I am Yuping Ma from CICC. I have 2 questions. The first one is that I would like to have a follow-up question on the expectations of the GWP growth. I want to understand that what is the driver in the future from which ecosystem and which products. Also in terms of [Indiscernible] of the products, which kind of products are real potential and becoming the long-term driver for us? And second question is about the credit insurance. So you can see that -- so you had the underwriting profitability in 2023 for the credit insurance by the current stage, I think that people are concerning about this. So we'd like to understand your countermeasures over this, whether you have confidence? And how do you think about the long-term growth strategy, whether you have adjusted this?
Thank you very much for your questions. So innovation is the gene of ZhongAn and also in our announcement, you have already seen that in different ecosystems, we have actually a very good innovation. Also, I would like to give you a brief summary. First one is that on the digital lifestyle ecosystem. In the e-commerce business, we are actively embracing the new areas like livestream and short videos and vertically integrated e-commerce. Also, we are having innovations a lot by embracing them and like the [Indiscernible] and [Indiscernible] insurance, et cetera. Also focusing on those less and popular areas, and we have our advantages in terms of pricing and designing of our products. Also, at the same time, we are focusing on some of the green economy areas. So for instance, the PVs and I mean, affordable tech and renewable energies. And also in terms of our health care ecosystem, we also have a lot of final innovations and also a lot of incremental growth announcement. We have iterations of personal granting policy in covering more users. In recent years, the clinical illness insurance has the growth of over 100%, because we have -- we are beginning to the deeper demand of our users and also critical owners and merchant insurance are also developing very well. So in the future, we have to really focus on this and making this as a sustainable growth engine. Another one is for the auto ecosystem -- auto insurance ecosystem. You know that for the last years, the GWP growth was very rapid, but because still the base number was small, but I believe that, well, we are having more underwriting and transactions finished online for the auto insurance and the habits of transactions is going to change. I do believe that the auto insurance segment will be exploded very soon. So I think that we fully believe in ourselves, and we are more than capable to seize the opportunity of this round. In the future, we are going to adhere to our original aspiration and focusing on the long-term strategy. So by leveraging new technologies, we are going to create new customer experience and create more products with more added values. So we are confident over our long-term growth in the future. And in terms of the consumer finance, I would like to hand over the call to [Juan Ming] to answer this question.
Thank you very much for this question. Actually, we have a prudent operational mindset and risk control methods. So at the current stage, we maintain a very good robustness. So for the consumer finance, the online assets have been keeping a very good positioning. So of course, considering the overall macroeconomic pressure, which is quite big and the industry is shifting and experiencing the shift had adjustments. So in the second half of last year, we have identified those risks and also made some countermeasures. So the kind of premium growth was shrinking for this business. In the second half of last year, the GWP growth of consumer finance sector was only increasing about 2% only, in the second half whereas in the first half of last year, we had 52% of the growth of GWP for the Consumer Finance segment. So you know that there was a big change on it. And also from these figures and statistics, we see that still the consumer finance segment is profitable and also better performing than the industry average. So as we have already mentioned, that we are providing the other product insurance and also tailoring to the needs of different users. Also, as for the value contribution, year-on-year wise, we had an increase. actually towards the future. Of course, we're going to be confronted with many different external challenges, the uncertainties about the economic growth. But still, I think that the consumers are still going to have a very rational consumption needs. We're going to be precautious and prudent and also, we are going to focus on the risk control fashion. So we are able to provide the franchise services to those users and also, at the same time, we're going to maintain a very robust risk control measures and to realize a high-quality based growth for all the businesses.
Next question is from the City Bank, Michelle Ma.
Thank you very much for accepting this question. I am from Citibank. My name is Michelle. So just now -- we have already mentioned something about the operational channels. And in 2023, we had around 30% growth and also in the annual announcement, you already said that RMB7.6 billion of the total written premium. So this was already big enough and also accounting for 26% of GWP as a whole. So how are you going to focus on the proprietary channels and also the private domains and any methods and any strategies that you are able to be sharing with us? Second question is that just now, we have mentioned that for the banking segment, you have certain measures. Also, you had a plan of having a breakeven for this segment by 2024. So I would like to understand more details about this. Thank you.
Thank you very much, Michelle, for your questions. I would like to answer the first question, which is about the establishment of our proprietary channels. So for the proprietary channels, we have 2 focuses. The first one is that we are going to continue the focus on the traffic marketing and short video, livestreaming and also some of the public video traffic and to attract more users. And recently, on the [Xiaohongshu], the Red Book, we have been achieving a lot. Also, we're going to leverage some of the new technologies, for instance, artificial intelligence to improve the marketing efficiency and also establishing the branding continuously and increasing the brand recognition among the users. Also, in the past several years, by establishing the proprietary channels, we have already the apps and also the corporate WeChat, accumulating many users already. So how that we're going to benefit the users with more choices among the matrix and to have cross and upselling and cross service provision so that we are going to create more values for our users? This is something that we're going to think about. Also, how do we leverage the ITC at this round and to use AI and to have high efficient artificial intelligence to better retain the users and renew the users and also provide the better conversion rate. So with regards to the loss reduction of our technology segment, I would like to hand over to Juan Ming to answer this question.
Thank you very much, Michelle, for this question. For the Technology segment in 2023 still we maintained a very rapid growth. And especially in China, the technology export revenue was very robust even though the operational environment as a whole for some of the customers had the impact on the revenue. But on the overall basis, in terms of digital transformation and also the technology investment based on this digital transformation, actually, this is something that has been enhanced continuously. So this is the industrial background and the contract signing and also the revenue all grew a lot. So as for the technology output and technology export business, we have confidence in having a long-term and high-quality growth. Also, as we have already mentioned that for instance, the Mate, the new generation of core systems have been launched in many different P&C insurers and by iterating the products in the future based on this Mate as a core we are going to further optimize the initial tax metrics and also to further boost our user stickiness and also the user coverage of our existing products and also the repeated purchase rate is going to be improved and more products could be optional, so that the more efficient and higher [tonnage] products could be provided to the users. Actually, for this Mate core system, this is actually a revolutionary product that we have. Also based on a better product R&D and also based on the more investments that we have conducted to the product development. Now we have a better product and the better operational cost and also a better match of our products with the users' needs and demands. So during this whole approach, the gross margin of our product is going to be improved. Also in other areas in terms of data, for instance, we are already operating the collaborations with many different data companies in terms of the provision of services of data governance and data at platforms and others. So by leveraging our experience, we are also going to provide AI services to our users like the AI modeling and data modeling, for instance, to help them with their digital transformation.Ă‚Â So in the past, we have already had a very good product and investments. Also some of the digital products are available this year, I believe, continuously. So for this technology segment, we will have more business profit margins. And also it is worth mentioning that in 2023, the Hong Kong IFRS -- I mean the China version of IFRS 17 is going to be implemented. So we are having R&D focusing on this standard, and we were involved quite early. That's why you can see that when the product is launching into the market is already a very mature product, which has already been testified by the different scenarios. So I believe that this is going to be more matching the people's needs and also a very good and tailor-made solution. Also will be welcomed by the users and this segmented market, we're going to have a far leading market share. Also by having this particular kind of situation, on one hand, we're going to have more continuous revenue and also, at the same time, we are going to have more products and better business with higher profit margin. But of course, while we are diversifying the business of technology export, at the same time we're also increasing the efficiency of management and also the human resource efficiency. We firmly believe that in the future, by leveraging this experience in the past and also by having the same momentum capped in the future, we will definitely give a very satisfactory result. Thank you.
So next question is the Rick [Indiscernible] from Morgan Stanley.
This is Rick [Indiscernible] from Morgan Stanley. I have 2 questions. The first question is about the investment. So now while the interest rate is reducing and also there is a fluctuation, but how do we think about the equity and also fixed income investment proportion? Second question is that we would like to have a follow-up that throughout this year, the overall premium is growing and breakdown by ecosystems. I'd like to understand that which ecosystems are having a better growth and the reasons behind.
So thank you very much for this question. With regards to the investment, the overall investment is always fixed on the fixed income investment and also that as of the end of last year, in total, RMB38.2 billion of those assets and also a lot of them are fixed income. And comparing with the level of 2022, we had actually an increase. Also we know that AA and above accounted for 92.4% and 77% of them are having triple A and above. So while talking about this overall market, while we had the new standard implemented, the investment strategy is optimized. We are emphasizing more on the comprehensive yield of investment. Also in terms of equity we have also more kinds of assets with a higher dividend so that we are going to see a lowering of the risk of investment and also now we are going to enjoy the long-term development benefit.Ă‚Â And in 2024 in terms of the overall premium growth in 2024, the overall drivers of our premium is on 2 areas. The first one is digital lifestyle, the other is the health care ecosystem. So these 2 ecosystems are something that we're going to focus on the premium growth. Throughout the whole year of 2024, we are also going to actually pay, not only the attention to the growth premium, but also the quality of the premium and also underwriting quality as well. Also, the user satisfaction also is going to be paid attention to. Hopefully, that we're going to sustainably grow ourselves. Also, throughout the whole year, we are going to really realize a robust development as a whole. Thank you.
Due to the limit of time, this is the end of this annual announcement. So on behalf of the management, I'd like to thank you all for your participation. Ladies and gentlemen, this is the end, and you may disconnect now. Thank you very much for your participation again.