[ET Net News Agency, 3 December 2020] Daiwa Research lowered its target price for
ZhongAn Online P&C Insurance (06060) to HK$40 from HK$47 and maintained its "hold" rating.
The research house cited ZhongAn management saying that premium growth in the health
insurance segment softened in 2H (to around 20% on Daiwa's estimates), given the
stabilisation of the pandemic and a much higher base.
Daiwa noted that the recent rising competition in online health insurance products is
leading to higher commissions being paid to some of its distributional partners,
particularly Ant. This will affect the improving trend of its expense ratio in 4Q and
2021. Hence, Daiwa's forecast of the Combined Ratio (CoR) is more conservative than the
consensus, at 101.5% versus 99.5% for 2020 and 100.1% versus 98.3% for 2021. (KL)