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What's going on?
Chinese internet-only insurer ZhongAn completed the first ever IPO of an insurtech firm, reportedly raising $1.5 billion from new investors on Friday!
What does this mean?
ZhongAn is Chinas first online-only insurer, and was founded by a group of well-known Chinese executives, including Jack Ma, the founder of famed ecommerce site Alibaba. The company says it has already written billions of insurance policies to hundred of millions of clients. So far, ZhongAn offers insurance for ecommerce transactions, like those conducted on Alibaba, as well as for everyday stuff like mobile phones.
Why should I care?
For markets: ZhongAn will now try to focus on more profitable areas of insurance.
Right now, ZhongAn isnt making any profit but it says that after the IPO it plans to expand into life insurance and healthcare products (i.e. longer-term products that are more valuable than the shorter-span ecommerce policies it sells now). The challenge will be growing quickly in these more established realms of insurance (up until now, it has largely piggybacked on the growth of ecommerce).
The bigger picture: China is a global leader in financial tech.
Given the highly developed nature of Chinas fintech sector, it is perhaps unsurprising that China was home to the worlds first insurtech IPO. One of ZhongAns main initial backers was Ant Financial, an affiliate of Alibaba. Ant Financial operates both the worlds largest digital payments platform and the worlds largest money market fund (which is a sort of investment fund that is supposed to be ultra-safe, like cash). The scale of Chinas fintech firms dwarfs that of any other country including America.
Originally posted as part of the Finimize daily email.
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