Huize Enjoys User Growth Despite Industry Challenges
While macroeconomic issues troubled the industry, the insurance provider still saw improvement in key factors.
Grace Lieberman
Grace Lieberman
Dec. 01, 2021 19:35
Huize Enjoys User Growth Despite Industry Challenges

(CapitalWatch, Dec. 1, New York) Huize Holding (Nasdaq:HUIZ) reported cost reductions and growth in key aspects of the company in its third-quarter earnings report despite macroeconomic challenges impacting the insurance industry in China.

The company said it expects total operating revenue for the full year of 2021 to be in the range of around $295 to $310 million, a year-over-year increase of approximately 56% to 64%. The gross written premiums facilitated on Huize's platform increased 24% year-over-year to $149.8 million, and first year premiums accounted for more than half. Huize founder and CEO Cunjun Ma said the company is very pleased to be able to deliver its robust growth.

"Benefiting from our omni-channel digital distribution platform and continued product co-development efforts with our insurer partners, we were able to drive significant growth in the saving insurance product segment during the quarter to offset the continued market weakness in protection insurance products due to depressed consumer confidence," Ma said.

Over the past year, Huzie said, changes in the insurance industry in China have created a challenging environment for the company. Despite the roadblocks, Huize still reported significant growth to their user base. Ma said that Huize believes new regulatory measures will bring, "short-term headwinds to the industry but also opportunities," for companies like Huize with established technological infrastructure and a demonstrated record of regulatory compliance. 

The company recovered from a second-quarter dip, but saw a decrease in revenue year-over-year in its third-quarter earnings report. Operating revenue rebounded from the second quarter with a 44.1% quarter-on-quarter increase and the contribution from savings products was 66.7% in the third quarter, a dramatic increase compared to 38.2% in the second quarter and demonstrating a pattern of continuous growth since the first quarter of 2021. Huize also reported that the average ticket size of savings products facilitated on the platform increased to around $5,500 compared to just under $4,000 in the previous quarter.

Huize reported a 1% reduction in operating costs year-over-year, in line with a 9.6% decrease in operating revenue from the same quarter in 2020. Huize cited a lower average commission rate as a result of an increase in first year premium contribution from annuity insurance products, which are commonly used as part of retirement plans, for the decrease.

The leading digital insurance product and service platform reported that its cumulative number of insurance clients served increased to about 7.3 million at the end of September and the cumulative number of insured clients reached around 61.4 million. Huzie also reported its continued effort to collaborate with insurer partners, having cooperated with 102 insurance partners as of Sept. 30, including 62 life and health insurance companies, as well as 40 property and casualty insurance companies. Huzie recently entered into a partnership with Huagui Life Insurance Company Ltd to co-develop a customized term life insurance plan called "Da Mai Ding Hai Zhu." 

"Since the beginning of the year, we have been implementing an upgrade of our business to an open platform architecture to provide our users with more diversified and personalized products and services online and offline," Ma said. "Starting from the fourth quarter, we are also actively implementing a group-wide organizational optimization program to improve our cost structure and operating efficiencies." 

The general insurance industry overall is projected to see serious growth in the coming years. The general insurance industry in China could reach $313 billion by 2025 from $196.8 billion in 2020 in terms of direct written premiums (DWP), according to GlobalData.

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